Reuters: Financial Services and Real Estate: Seoul shares fall on profit-taking, investors wary over China rate cut

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Seoul shares fall on profit-taking, investors wary over China rate cut Jun 8th 2012, 03:27 Tweet Share this Email Print Thu Jun 7, 2012 11:27pm EDT * KOSPI falls but still poised for 3-week rally * Steelmakers rise after China rate cut decision * Automakers sputter after dashed U.S. stimulus hopes By Joonhee Yu SEOUL, June 8 (Reuters) - South Korean shares eased on Friday as investors booked profits from the latest two-day rally and as worries lingered over the euro zone and slowing global growth despite a surprise rate cut by China to boost its slowing economy. The Korea Composite Stock Price Index (KOSPI) was down 0.54 percent at 1,838.02 points as of 0225 GMT. But it was still up marginally for the week, which would represent a third-straight weekly gain if the market was to close at that level. "There wasn't enough momentum to sustain the relief rally especially after hefty gains made on Thursday, with investors booking profits amid persistent negative buzz surrounding the euro zone," said Kim Ji-hyung, an analyst at Hanyang Securities. "As for China's rate cut, no immediate impact should be expected as it is a long-term action with slow yielding results which we may begin to see in third quarter and beyond," Kim added. Investors cheered China's surprise decision to cut interest rates for the first time in more than three years, but optimism was replaced by caution as investors and economists worried that the move signaled the impending release of some grim economic data. China-linked steelmakers posted modest gains following the rate cut, as Hyundai Steel rose 3 percent while POSCO gained 2.1 percent. The broad market was down across the board however, with 18 of 20 KRX sub-indices drifting in the red. Automakers led declines after Federal Reserve Chairman Ben Bernanke offered no new hints of further easing at a congressional testimony despite recent signs of sputtering growth in the world's largest economy. The United States is Korean automakers' largest export market, Hyundai Motor fell 1.5 percent while KIA Motors shed 1 percent. Hyundai and Kia are, respectively, the second and third largest components in the KOSPI index by market capitalization. Market reaction was muted to South Korea's rate decision, with the central bank holding rates at 3.25 percent for the 12th consecutive month as had been widely expected. However, it cited greater downside growth risks from the deepening euro zone crisis, hinting at a potential stance shift amid growing rate cut expectations. (Reporting by Joonhee Yu; Editing by Kim Coghill) Tweet this Link this Share this Digg this Email Reprints Comments (0) This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

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