Seoul shares stumble on Ukraine tensions; China, ECB eyed

Mon Mar 3, 2014 9:56pm EST

* Benchmark index touches weakest level since Feb. 24

* Foreigners take money out for 2nd straight day

* Analysts say China, ECB events provide some support

By Se Young Lee

SEOUL, March 4 (Reuters) - Seoul shares fell to their lowest level in more than a week on Tuesday morning, hit by foreign outflows and flight to safety as the escalation in tensions between Ukraine and Russia showed no signs of abating.

The Korea Composite Stock Price Index (KOSPI) was down 0.4 percent at 1,957.82 points as of 0248 GMT. The index traded as low as 1,954.58 earlier, marking the weakest level since Feb. 24.

Russian forces tightened their grip on the Russian-speaking Crimea region and the U.S. said it will look at a series of economic and diplomatic sanctions that would isolate Moscow, forcing investors to dispose riskier assets.

However, Mirae Asset Securities analyst Chung Seung-jae said the selling was tempered ahead of the Chinese annual parliament meetings and the European Central Bank policy review later this week.

"Investors are waiting to see what growth targets or stimulus-related comments will be offered from China, while there are growing expectations for additional stimulus or an outright rate cut by the ECB," Chung said.

Foreigners were net sellers in morning trade, on track for the second consecutive session of outflows.

Steelmakers Posco and Dongbu Steel Co. were down 1.6 percent and 1.3 percent, respectively, hit by continued worries that a deeper slowdown in China could hurt demand and earnings.

Going in the opposite direction, shares of LG Innotek Co. jumped 4.6 percent on expectations of stronger earnings. Kiwoom Securities said in a report published on Tuesday that profitability from the company's light emitting diode business was improving at a faster-than-expected rate, raising its forecast for the company's first-quarter operating profit.

Decliners outnumbered advancers 418 to 350p.

The KOSPI 200 benchmark of core stocks was down 0.4 percent, while the junior KOSDAQ was 0.4 percent higher. (Reporting by Se Young Lee; Editing by Shri Navaratnam)