Seoul mood buoyed by ECB rate cut; bank, shipping shares drag

Thu May 2, 2013 10:09pm EDT

* ECB rate cut lifts sentiment, but upside limited

* Autos firm after monthly sales increase

* STX shares lose ground as group struggles

By Jungyoun Park

SEOUL, May 3 (Reuters) - Seoul shares traded flat on Friday after falls in the previous session with sentiment boosted by the European Central Bank's cut in interest rates to an all-time low 0.5 percent, but dips in banks and shipbuilders weighed.

"The ECB's action comes as a sign governments are determined to tackle the economic issues. This points to further stimulus measures and its is positive for sentiment," said Lee Jae-hun, a market analyst at Mirae Asset Securities.

Global equity markets rallied after the European Central Bank cut interest rates for the first time in 10 months on Thursday, and held out the possibility of further policy action to support the recession-hit euro zone economy.

But the upside was limited with investors showing some uncertainty about corporate earnings, Lee said.

The Korea Composite Stock Price Index (KOSPI) was flat at 1956.61 points as of 0124 GMT.

Institutions were buyers of a net 19.6 billion won worth of stocks as of 0129 GMT.

Automakers rose after they posted solid increase in monthly sales.

Hyundai Motor said after market's close on Thursday its April sales were up 9.7 percent from a year ago.

Kia Motors saw year-on-year sales increase of 8.7 percent during same period.

Hyundai Motor shares were up 1.8 percent and Kia Motors rose 2 percent.

Shares in STX Corp and its affiliates lost ground in a flow of negative news about the conglomerate.

STX Corp has been shedding assets to resolve mounting debt problems in affiliates such as STX Offshore & Shipbuilding Co Ltd, which is seeking a corporate restructuring agreement from its creditors.

STX shares were down 2.9 percent and STX Engine shed 3.4 percent. STX Pan Ocean fell 1.2 percent.

Other shipbuilders also fell. Shares in Samsung Heavy Industries were down 1.2 percent and Hanjin Heavy Industries lost 0.8 percent.

Telecommunication stocks continued to rally on strong investor preference for defensive stocks.

SK Telecom, South Korea's top wireless carrier, rose 4.2 percent. KT advanced 3.3 percent.

Banks fell on the continuing effect of their poor earnings.

Shinhan Financial Group was down 0.94 percent and Hana Financial Group fell 2 percent. (Reporting by Jungyoun Park; Editing by Eric Meijer)

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