Seoul shares rise amid Greece relief but gains capped

Thu Jun 30, 2011 3:03am EDT

Related Topics

* Foreign, institutional buying give support

* KAI jumps on debut

* Banks shrug off household debt measures

By Jungyoun Park

SEOUL, June 30 (Reuters) - Seoul shares edged up on Thursday, with sentiment lifted by news the Greek parliament had approved austerity measures to avoid the country defaulting on its debts, but gains were limited after sharp rises in the previous session.

The Korea Composite Stock Price Index finished up 0.3 percent at 2,100.69 points.

"The Greece news comes as welcome confirmation, though gains were limited as the market had already risen sharply in the previous session," said Bae Sung-young, a market analyst at Hyundai Securities.

Greece approved the first of two austerity measures on Wednesday despite worsening street violence, in a vote vital to winning fresh international aid so it can pay its debts on time and stave off bankruptcy.

"Key economic data coming out in early July such as U.S. manufacturing numbers will be closely followed and will determine the market's direction," Bae added.

Foreign investors were buyers of a net 180.5 billion won ($168.2 million) worth of stocks, and institutions picked up a net 150.7 billion won, buying shares for a ninth straight session.

Brokerages rallied, with Woori Investment & Securities rising 1.8 percent and Samsung Securities advancing 3.4 percent.

Falls in refiners weighed, as S-Oil shed 1.8 percent and SK Innovation declined 1 percent.

Korea Aerospace Industries Ltd jumped 43 percent on its first day of trading. Shares in the aviation equipment and parts maker ended at 22,150 won compared with the initial public offering price of 15,500 won.

"KAI has great growth potential as the only aviation equipment manufacturer in the country," said Shinhan Investment Corp analyst Hur Min-ho.

"Also, there are expectations of its full privatisation in the near future, so there is an M&A premium."

Korea Finance Corp, a government financial body, controls 26.4 percent of KAI.

Banking stocks showed a muted reaction to news late on Wednesday South Korea would require banks to raise risk weightings in their capital ratios for heavy borrowers as part of measures to prevent heavy household debts from causing a fresh financial crisis.

The measures were largely in line with market expectations and were expected to help bank's financial health in the longer term, analysts said.

"Most Korean banks have successfully increased loans in corporate sector driven by strong capex demand. We believe the impact on bank earnings could be rather mitigated," Bryan Song, head of research at Bank of America Merrill Lynch in Seoul, said in a note late on Wednesday.

Hana Financial Group rose 0.54 percent. Woori Finance Holdings advanced 1.1 percent after South Korea said it received interest from three local private equity funds for the government's $6 billion stake in Woori Finance, raising hopes the troubled auction may go through.

Daewoo Shipbuilding and Marine Engineering rose 1.1 percent after the company said it had landed an order worth $400 million to build two LNG carriers from Greece.

KOSPI 200 Sept futures KSc1 ended up 0.85 points at 276.60 points and the KOSPI 200 spot index rose 0.56 points to 275.17. The junior Kosdaq market ended up 0.63 percent at 479.55.

Move on day +0.30 percent

12-month high 2,231.47 27 April 2011

12-month low 1,650.30 6 July 2010

Change on yr +2.42 percent

All-time high 2,231.47 27 April 2011

All-time low 93.10 6 JAN 1981 ($1 = 1073.000 Korean Won) (Editing by Jonathan Hopfner)

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