South Korea shares on track for fourth day of gains, won strengthens

Wed Aug 13, 2014 10:37pm EDT

* Stocks follow US gains, but trading muted ahead of holiday
    * Won gains as bets for bigger BOK rate cut are unwound
    * BOK delivered 25 bps rate cut, in line with expectations

    By Se Young Lee
    SEOUL, Aug 14 (Reuters) - South Korean shares were up in
early Thursday trade, inching higher following positive leads
from Wall Street overnight but unable to find further upside as
the market heads into a long weekend. 
    The Korea Composite Stock Price Index (KOSPI) was up
0.2 percent at 2,067.08 points as of 0214 GMT, on track to post
its fourth consecutive session of gains. 
    But market activity was muted as investors remained wary
about overreaching in the absence of major local cues. Local
markets are closed on Friday for a public holiday, discouraging
aggressive bets. 
    The Bank of Korea cut its benchmark policy rate by 25 basis
points earlier on Thursday, in line with expectations, with
Governor Lee Ju-yeol to hold a news conference starting around
0220 GMT. 
    "The Bank of Korea delivered a rate cut today as expected
and there is still hope for growth-supportive policy measures,
but when investors look at corporate earnings for the quarter
they haven't been all that good," said Shinhan Investment
analyst Han Beom-ho, adding that market participants lack the
conviction to take large positions.  
    "Policy alone can't pull the market higher," he said.  
    Foreigners were net buyers of 100.5 billion won ($98
million) worth of local shares near mid-session, buttressing the
index. 
    Shares of Shinsegae Co Ltd and Amorepacific
Group were up 4.8 percent and 2.6 percent, on signs
of improving earnings.
    Hyundai Motor Co shares were down 0.4 percent,
however, weighed by profit-taking pressures following three
straight days of gains. The company's South Korean workers are
also voting on Thursday over whether to strike after wage
negotiations broke down. 
    The South Korean won edged higher on Thursday,
erasing early losses following the Bank of Korea's rate decision
as some investors who had bet on a bigger rate cut covered their
short positions. 
    The local currency was quoted at 1,026.3 against the dollar
as of 0214 GMT, compared with Wednesday's domestic closing level
of 1,028.9. 
    Lead September futures on three-year treasury bonds 
were down 0.07 points, as investors who had bet on a bigger
central bank rate cut unwound their positions. 
    
                       0214 GMT    Prev close
 Dollar/won            1,026.3       1,028.9
 Yen/won           10.0000/068       10.0517
 *KTB futures           106.91        106.98
 KOSPI                2,067.08      2,062.36
 * Front-month futures on three-year treasury bonds


(1 US dollar = 1,026.2000 Korean won)

 (Additional reporting by Yena Park; Editing by Eric Meijer)
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