Seoul shares hit 3-month low after U.S. budget deal
(Updates to mid-morning)
* KOSPI weaker in line with regional markets
* "Quadruple witching day" in Seoul, but effect seen limited
* Foreigners net selling of local stocks drags on index
* Hanjin Shipping up on merger report
SEOUL, Dec 12 (Reuters) - Seoul shares fell to their lowest level in three-months early on Thursday, after a budget deal in Washington was viewed as paving the way for an early cut in monetary stimulus by the Federal Reserve which unnerved investors.
The Korea Composite Stock Price Index (KOSPI) was down 0.5 percent at 1,969.00 points as of 0217 GMT after touching an intraday low of 1,958.99, its lowest since Sept.6.
"Such a quick measure taken by Washington lawmakers caught a lot off guard, adding to the batch of robust U.S. data for the Fed to consider an early cut in stimulus," said Lee Eun-taek, an analyst at Dongbu Securities.
"However, an absence of variables in the market is what really concerns many, as risk sentiment hasn't picked up for a while."
Wall Street dropped overnight after a bipartisan budget agreement reached late on Tuesday was seen alleviating fiscal pressure that had led to the Fed's decision to keep its $85 billion a month bond purchasing stimulus in September.
Thursday is the so-called quadruple witching day in Seoul, when stock options and futures as well as index options and futures all expire on the same day.
But there was little volatility in equity market as only a few traders were seen unwinding positions.
"With the Fed tapering concern pulling down the stock markets, spread margins won't climb back to its previous high-levels, but is still higher than the fair value to prompt investors to switch into spot purchases," said Jun Gyun, a derivatives analyst at Samsung Securities.
Foreign investors sold a net 139.7 billion won ($132.79 million) worth of local shares near the mid-session, weighing on the main index.
Market heavyweights struggled early on, with Samsung Electronics Co Ltd falling 1.2 percent while SK Hynix Inc dropped 1.9 percent.
Doosan Heavy Industries & Construction Co Ltd tumbled 4.3 percent, after announcing its block deal plan to offload 318.3 billion won worth of its own shares as a part of financial restructuring in a regulatory filing on Wednesday.
Hanjin Shipping Co Ltd and Hanjin Shipping Holdings Co Ltd rose 2.7 percent and 4.7 percent, respectively, as The Korea Economic Daily reported that the two companies will merge and be affiliated to Korean Air Line Co Ltd . The Korea Exchange (KRX) requested a regulatory filing to the companies on the matter.
Decliners outnumbered advancers 466 to 288.
The KOSPI 200 benchmark of core stocks slipped 0.5 percent while the junior, tech-heavy KOSDAQ edged 0.2 percent higher.
($1 = 1052.0500 Korean won) (Reporting by Jungmin Jang; Additional reporting by Seongwon Chang; Editing by Jacqueline Wong)
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