(Updates to mid-morning)
By Park Jung-youn
SEOUL, June 4 (Reuters) - Seoul shares traded flat on
Wednesday restrained by deepening credit worries on continuing
talk a major U.S. bank may need more capital, although easier oil
prices supported airlines such as Korean Air Line (003490.KS).
Oil's fall on Tuesday lifted airlines across the board,
boosting Korean Air Line by 1.69 percent to 54,100 won and Asiana
Airlines (020560.KS) by 1.75 percent to 5,800 won.
U.S. crude CLc1 settled down 2.7 percent to $124.74 a
barrel, receding from its recent record above $135.
Shares in Kia Motors were boosted by its solid May U.S.
vehicle sales, which were up 4.9 percent despite a broader fall
in U.S. auto sales last month [ID:nN03391935]. Kia Motors shares
gained 1.33 percent to 11,400 won.
The Korea Composite Stock Price Index was up 0.06 percent to
1,820.44 points as of 0115 GMT.
"Shares will move in a tight range as risk factors are abound
while there are few positive elements in the market," said Won
Jong-hyuk, a market analyst at SK Securities.
"The index may pick up from the second half of this month or
early in July on earnings momentum," Won added.
"Also a view that the Fed will keep its interest rate on
hold, or even raise it in the future, has given some strength to
the U.S dollar, helping to keep energy prices in check," said
Shim Jae-youb, a market analys at Meritz Securities adding that
domestic consumption shares may benefit.
Meanwhile some financials rallied modestly after their fall
on Tuesday in reaction to a media report that Lehman Brothers
LEH.N was considering raising as much as $4 billion.
Samsung Securities (016360.KS) was up 1.7 percent to 72,200
won and Kookmin Bank 060000.KS was up 0.16 percent to 63,500
won.
South Korean financial institutions have little exposure to
the troubled U.S. subprime mortgage sectors, and despite the
dampened sentiment towards financial issues, shares will likely
move steadily, analysts said.
"Besides financials have fallen quite a lot already," said
Shim of Meritz Securities.
Steelmakers gained on continuing upward momentum following a
recent hike in price of steel rods by a smaller steelmaker
Dongkuk Steel (001230.KS).
POSCO rose 0.68 percent to 589,000 won, after Citigroup
boosted its target price on No.4 steelmaker to 680,000 won on
Wednesday, saying that it expects POSCO to pass on higher costs
of raw materials into product prices in the near future.
Hyundai Steel (004020.KS) was up 2.33 percent to 83,400 won
and Dongbu Steel (016380.KS) was up 2.45 percent to 14,650 won.
