South Korean shares sink to 2-1/2 month low as euro zone weighs
* Euro zone, North Korea threats weigh on KOSPI
* Eyes on ECB policy meeting for euro comments
* Utilities, foodstuffs fall as won halts climb
* LG Elec, SK Hynix up on DRAM price recovery
By Somang Yang
SEOUL, Feb 7 (Reuters) - South Korean shares fell to a 10-week low on Thursday as investors cut back on bullish bets ahead of a policy meeting of the European Central Bank and its view on growth prospects in the euro zone, a key export market for firms.
The Korea Composite Stock Price Index (KOSPI) closed down 0.2 percent at 1,931.77 points, losing ground for a sixth straight day.
"The index is trading near its book value at the 1,900-mark so you would think there was little room to fall further," said Park So-yeon, an analyst at Korea Investment & Securities.
"But with new troubles brewing in the euro zone and North Korea's stepped-up threats, it looks as though the KOSPI will be in subdued for a while."
North Korea has stepped-up its bellicose rhetoric of late, threatening to go beyond carrying out a promised third nuclear test.
Traders will be watching for comments about the euro's recent strength when the ECB holds its policy meeting later today amid political uncertainty in Spain and Italy.
The sector sub-indices for utilities and foodstuffs -considered to be defensive plays- saw the biggest falls, shedding 2.6 percent and 1.7 percent respectively.
State-owned utility KEPCO fell 3.5 percent to a one-month low as the cost of its imports rises following government attempts to weaken the South Korean won.
"The recent halt in the won's firming is bad news for utilities as it makes the imports more expensive," said Kim Dae-sung at Hyundai Securities.
However, tech blue-chips LG Electronics and SK Hynix bucked the trend, gaining 2 percent and 1.4 percent on rising prices of DRAM chips.
Overall, declining shares outnumbered winners 411 to 386.
Local institutions sold a net 80 billion won ($73.53 million)worth of KOSPI shares, weighing on the main board.
The KOSPI 200 benchmark of core stocks closed down 0.1 percent, while the junior KOSDAQ edged 0.2 percent lower.
Move on day -0.23 percent
12-month high 2,057.28 14 March 2012
12-month low 1,769.31 25 July 2012
Change on yr -3.27 percent
All-time high 2,231.47 27 April 2011
All-time low 93.10 6 January 1981 ($1 = 1088.0500 Korean won) (Editing by Sanjeev Miglani)