* KOSPI drops 2.6 pct
* Banks continue falling after capital-raising reports
* Daewoo E&C tumbles as stake sale hopes fade
(Updates to close)
By Jungyoun Park
SEOUL, June 4 (Reuters) - Seoul shares fell 2.6 percent on
Thursday, their biggest daily percentage loss in five weeks, with
renewed economic worries sending key industrial issues lower and
banks tumbling on capital raising news.
The Korea Composite Stock Price Index (KOSPI)
finished down 2.6 percent at 1,378.14 points.
"Foreign selling, following a long streak of buying,
pressured markets. The latest surge in crude prices seems to have
shifted foreign interest from Asia to oil-producing regions such
as South America," said Bae Sung-young, a market analyst at
Hyundai Securities.
"U.S. macroeconomic data did not come out too well, and there
are jitters before key U.S. job data due out on Friday," Bae
said, adding that options and futures expiry later this month
could cause more volatility.
The United States may have hit a bump on the road to economic
recovery, according to data released on Wednesday, with half a
million private sector jobs lost in May and mortgage applications
falling last week.[ID:nN03345672]
Foreign investors sold a net 160 billion won ($127.8
million), offloading stocks for a second straight session, after
snapping a 13-session buying streak on Wednesday.
Key industrial issues declined, with POSCO (005490.KS), the
world's No.4 steelmaker, losing 3.92 percent, while Hyundai Heavy
Industries (009540.KS), the world's biggest shipbuilder,
retreated 4.88 percent.
Banking issues continued to tumble after reports on Wednesday
that some were moving to raise capital.
KB Financial Group (105560.KS), parent of top South Korean
bank Kookmin, said on Wednesday it might sell new shares to raise
capital and local media reported others might follow
suit.[ID:nSEO249141]
Shares in KB Financial sank 4.84 percent and Hana Financial
Group (086790.KS) shed 7.28 percent.
Meanwhile Lotte Chilsung Beverage (005300.KS) rose 4.03
percent after the Seoul Metropolitan Government gave Lotte Group
permission on Thursday to develop Lotte Chilsung-owned land in
Seocho district, an upmarket part of southern Seoul, for
commercial use.
"The details of the project will be finalised after
consultations with the city government," said Lotte Chilsung
spokesman Sung Ki-seung.
But Daewoo Engineering & Construction (047040.KS) tumbled
10.34 percent after a local media report its majority shareholder
Kumho Asiana Group may not have to find new investors to fund its
2006 acquisition of the builder by end of July, as widely
reported previously.
MoneyToday reported Kumho Asiana Group was only obligated to
submit an outline of plans to secure funding by end of July.
A Kumho Asiana Group spokesman declined to comment.
"The report has pointed to the possibility that Daewoo
Engineering may not be put up for sale any time soon, and shares
are giving up the gains made on such hopes," said Kim Suck-joon,
an analyst at SK Securities.
($1=1251.9 Won)
