Seoul shares ease from six-week high; POSCO falls

Tue Dec 4, 2012 1:41am EST

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SEOUL Dec 4 (Reuters) - South Korean shares eased from a six-week high on Tuesday, but trimmed early losses to end only slightly lower as foreign and retail investor buying helped offset the impact of weak U.S. manufacturing data.

The Korea Composite Stock Price Index (KOSPI) ended down 0.25 percent at 1,935.18 points, having fallen 0.6 percent earlier in the day.

Chinese manufacturing output grew last month for the first time in more than a year but a surprise contraction in U.S. factory activity tempered optimism for the health of the world economy.

"The manufacturing data in China and Europe were good, but the key is the U.S. economy. The U.S. manufacturing sector remains lacklustre, weighing on the stock market today," said Cho Young-hyun, an analyst at Hana Daetoo Securities.

"The stalled U.S. budget talks will curb the short-term rally of the KOSPI. But I expect the U.S. manufacturing data to rebound in December, as consumer sentiment is improving because of rising prices of assets such as homes, stocks and bonds," he said.

Heavyweights ended the session lower after choppy trade, with Hyundai Motor edging down 0.2 percent despite solid U.S. sales gains in November. Samsung Electronics finished flat.

POSCO lost 1.9 percent after news that the South Korean steelmaker had retained exclusive negotiating rights to acquire a stake in a Canadian iron ore mine operator controlled by ArcelorMittal.

The Korea Economic Daily reported on Tuesday that POSCO has invited South Korea's National Pension Service to act as a financial investor in the deal, expected to be worth more than $1 billion.

"Investors have no problems with POSCO seeking to secure steelmaking materials, but the price does matter. Investors are concerned about potentially high acquisition prices, which are sending POSCO shares down today," said Kim Yun-sang, an analyst at LIG Investment & Securities.

Telecom stocks, regarded as defensive stocks because of their stable dividends, bucked the market decline, with LG Uplus up 0.8 percent and SK Telecom rising 0.99 percent.

Apparel companies also bucked the market fall on Tuesday, with the textile & wear sub-index up 1.5 percent, driven by expectations that South Korea's unusually low temperatures would boost demand for their products.

Decliners outnumbered gaining shares 430 to 368.

The KOSPI 200 benchmark of core stocks declined 0.3 percent, while the junior KOSDAQ rose 0.8 percent.

Move on day -0.25 percent

12-month high 2,057.28 14 March 2012

12-month low 1,750.60 19 Dec 2011

Change on yr +5.99 percent

All-time high 2,231.47 27 April 2011

All-time low 93.10 6 January 1981 (Reporting by Hyunjoo Jin; Editing by Richard Pullin)

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