(Updates to mid-morning)
SEOUL, May 8 (Reuters) - Seoul shares traded lower on
Thursday after the Bank of Korea dashed rate cut hopes by keeping
its key interest rate unchanged, while record high oil prices
added to worries about consumer sentiment.
The market gave a muted reaction to the central bank's
decision to keep its key rate unchanged at 5.0 percent for the
ninth straight month in May, with the Korea Composite Stock Price
Index down 0.32 percent to 1,848.02 points as of 0211
GMT, paring opening losses of more than one percent.
The KOSPI is still up some 20 percent from its mid-March low,
but analysts said it was to likely face further pressure in the
weeks ahead.
"I do not think the Bank of Korea will lower rates anytime
soon, so I'm ruling out a June rate cut here, unless we see some
dramatic decline in oil prices, for example," said Goh You-sun,
an economist at Daewoo Securities.
"The index is taking a breather from the latest rally, and
concerns about the economy and inflation have revived on the back
of record high oil prices," said Lee Sun-yeob, a market analyst
at Goodmorning Shinhan Securities.
Samsung Electronics (005930.KS), the world's top memory chip
maker and South Korea's largest company by market capitalisation,
fell 2.02 percent to 726,000 won after steep gains that lifted it
to a historical high on Tuesday.
"Its recent gains have been substantial, and with a May
option contract expiry today, it's bound to be volatile as it
comes under selling pressure," said Kim Young-june, an analyst at
Kyobo Securities.
"But the chipmaker's fundamentals remain solid, with DRAM
prices gradually recovering since bottoming out in the first
quarter," Kim added.
Financials such as Kookmin Bank 060000.KS also declined,
tracking their Wall Street peers' fall overnight after comments
by a U.S. Federal Reserve banker that the U.S. must be ready to
raise interest rates given inflationary pressures.[ID:nN07298593]
Kookmin fell 1.46 percent to 67,300 won and Shinhan Financial
Group (055550.KS) declined 1.58 percent to 56,000 won.
Steel makers fell on the back of the latest raw material
price hikes, and after speculation that China will give in to
Australian demands in iron ore price negotiations that could see
a price rise of up to 85 percent, which sent Chinese steel shares
down on Thursday. [ID:nSYD37]
"Chinese steel shares' fall and worries about raw material
price hikes are pressuring South Korean steel shares," said Lee
Chang-mok, an analyst at Woori Investment & Securities.
POSCO (005490.KS) fell 0.39 percent to 512,000 won and
Hyundai Steel (004020.KS) slid 0.24 percent to 82,200 won.
Retailers such as Lotte Shopping Co Ltd (023530.KS) fell on
concerns record oil prices may dampen consumer spending.
Lotte Shopping dropped 1.78 percent to 358,500 won and
Shinsegae (004170.KS) slipped 1.23 percent to 642,000 won.
($1=1032.5 Won)
(Reporting by Park Jung-youn; Editing by Jonathan Hopfner)
