Seoul shares up 12.5 pct; banks rally after loss
(Updates to midday)
By Park Jung-youn
SEOUL, Oct 30 (Reuters) - Seoul shares jumped on Thursday afternoon led by technology and industrial issues, while volatile banks belatedly reacted to news of a currency swap line set up overnight between South Korea and the U.S. Federal Reserve.
The Korea Composite Stock Price Index was up 12.51 percent at 1,090.23 points as of 0441 GMT, up from the session low of 992.89 points.
Banks reversed earlier double=digit falls to trade sharply higher, with KB Financial Group (105560.KS) rising 10.94 percent and Shinhan Financial Group (055550.KS) up 12.07 percent.
They had earlier fallen on worries about corporate defaults, particularly from units of construction-to-heavy industry focused C& Group which have said they had considered applying for creditor-led debt rescheduling.
"It seems that investors, who had been all worked up about the C&Group related news, finally grasped the positiveness of the U.S. currency swap line news, which is really the bigger news," said Ku Yong-uk, a market analyst at Daewoo Securities.
The KOSPI index is now up 22 percent from the year's low of 892.16 hit on October 27, but down 42.6 percent from the year's high of 1,901 reached in mid-May.
The U.S. central bank overnight extended U.S. dollar liquidity aid beyond traditional markets, opening up four new $30 billion currency swap lines, including one for South Korea [ID:n29580093]. "The new currency swap line comes as great news as this allays worries about dollar liquidity, which had been the key negative factor on Seoul markets. Indeed we are seeing the won currency rising to a more normal level, and this is boosting stocks," said Lee Kyung-su, market analyst at Taurus Investment.
"The index may be headed for normalised trading eventually, at their fair value, which I see at 1,200 and 1,300-range at current earnings momentum," Lee added.
Blue chip techs and industrials advanced across the board, with Samsung Electronics (005930.KS) rallying 14.11 percent and POSCO (005490.KS) gaining 14.85 percent.
Airlines were up helped by strength in the won currency, sending Korean Air Line (003490.KS) 14.85 percent higher and Asiana Airlines (020560.KS) up 14.93 percent.
Foreign investors were buyers of a net 98 billion won ($75.85 million) and institutions were picking up a net 130 billion won.
The Korea Exchange earlier suspended futures programme buying on both the main board and the junior Kosdaq market, citing volatile future prices amid the market's wild rally.
($1=1291.9 Won)
(Editing by Keiron Henderson)
