Seoul shares edge lower on Fed taper speculation, weaker yen

Mon Dec 9, 2013 9:29pm EST

(Updates to midday)

* KOSPI retreats after previous session's rebound

* Yen at over 5-year low against won, pressuring exporters

* Foreign investors reposition as net sellers

SEOUL, Dec 10 (Reuters) - Seoul shares edged lower early on Tuesday after a sharp rebound in the previous session, pressured by rising speculation that the Federal Reserve could start cutting back its stimulus this month and by a slide in the yen against the won.

The Korea Composite Stock Price Index (KOSPI) was down 0.3 percent at 1,994.98 points by 0200 GMT after touching an intraday low of 1,989.41. On Monday the index had risen 1 percent to snap a six-day skid.

Wall Street eked out gains for a second straight day, but risk sentiment was hurt after Fed officials made remarks that stimulus reduction could occur starting later in the month on the back of recent robust economic data.

"Simply there isn't a risk variable that can outweigh the pressure stemming from Fed tapering," said Choi Kwang-hyeok, an analyst at E-Trade Securities.

"Also the weaker yen against the won is dragging on the auto industry, halting the market's upward push," added Choi.

The Japanese yen hovered at an over five-year low against the won, hurting South Korean exporters' price competitiveness in overseas markets.

Hyundai Motor Co slipped 0.4 percent, adding to its 11.2 percent loss over the past eight sessions. Its affiliate Kia Motors Corp edged down 0.5 percent.

Other large-caps struggled as investors locked in gains from the prior session.

Samsung Electronics Co Ltd, the largest KOSPI component, fell 0.7 percent after Monday's 1.8 percent gain. POSCO, the third largest, slipped 0.7 percent.

Shipbuilders gave up gains from the previous day, with Hyundai Heavy Industries Co Ltd shedding 1.2 percent and Daewoo Shipbuilding & Marine Engineering Co Ltd falling 2 percent.

Foreign investors sold a net 27.2 billion won ($25.8 million) worth of local shares near mid-session, weighing on the index.

Declining shares outnumbered gainers 518 to 250.

The KOSPI 200 benchmark of core stocks edged 0.3 percent lower, while the junior KOSDAQ was down 0.9 percent. ($1 = 1053.0000 Korean won) (Reporting by Jungmin Jang; Editing by Chris Gallagher)