(Updates to mid-morning)
SEOUL, May 7 (Reuters) - Seoul shares traded firm on
Wednesday with a weak won boosting exporters, but gains were
limited by record oil prices and concerns a rally that has lifted
the index to a series of four-month highs is losing steam.
Carmakers such as Hyundai Motor (005380.KS) gained 1.86
percent to 87,700 won on the won currency's continued weaknss
against the U.S. dollar and euro, and after the news of its
strategic agreement with Microsoft (MSFT.O).
Shipbuilders such as Samsung Heavy Industries Co Ltd
(010140.KS) rose 4.34 percent to 38,550 won on the back of their
solid first quarter results and latest order wins, easing worries
about the impact of rising raw material prices and corporate
profit. Citi group put "buy" on Samsung Heavy on Wednesday.
The Korea Composite Stock Price Index rose 0.14
percent to 1,861.70 points as of 0129 GMT, hitting its highest
intraday level since Jan 4 and opening.
The index has now risen 21 percent from its mid-March low of
1,537.53 as credit crunch concerns fade, but analysts say the
main index will be challenged near 1,890s, and strong catalysts
such as signs of U.S. economic resilience and cooling inflation
pressure are necessary to push the index higher.
"Eyes are also on tomorrow's interest rate decision, as some
expectations have formed on rate cuts," said Lee Kyoung-su, a
market analyst at Daewoo Securities.
"However given that the April consumer price came out higher,
the central bank may keep the rate unchanged, at which the market
may express disappointment," Lee added.
A Reuters poll showed evenly divided between those expecting
rate cuts and rate freeze.[ID:nSEO147499]
HYUNDAI AUTOMOTIVE UNITS RALLY
Units of Hyundai Automotive Group rallied after news on
Tuesday that South Korea's top car maker and Microsoft agreed to
build a music and information system to debut in cars sold in
North America in 2010 on Tuesday.[ID:nSEO36472]
Kia Motors (000270.KS) jumped 3.82 percent to 13,600 won and
Hyundai Autonet 042100.KS, a carparts making unit of Hyundai,
advanced 6.31 percent to 6,910 won.
"The strategic alliance with Microsoft will give Hyundai
much-needed opportunities to build its own cutting-edge auto IT
systems," said Stephen Ahn, an analyst at Woori Investment &
Securities.
"So far, Hyundai has resorted to modeling other cars'
systems, but with Microsoft they could develop their own which
may prove to be superior," Ahn added.
Shares in some banks rose after news that South Korea has
accepted the resignations of the chief executives at Woori
Finance Holdings (053000.KS), Woori Bank, and state-run Korea
Development Bank.[ID:nSEF000156]
Woori Finance rose 2.77 percent to 20,400 won and Korea
Exchange Bank (004940.KS) rose 2.9 percent to 15,950 won.
Transportation shares such as Korean Air Line (003490.KS)
fell 2.77 percent to 52700 won after U.S. crude CLc1 settled up
$1.87 at $121.84 a barrel after touching a record $122.73
earlier.[ID:nSIN170894]
Asiana Airlines (020560.KS) dropped 0.96 percent to 6,160 won.
(Reporting by Park Jung-youn; Editing by Jonathan Hopfner)
