* Market cautious before BOK rate meeting, options expiry
* Automakers tumble on labour worries, yen weakness
* Foreign investors sell for a fourth straight session
By Jungyoun Park
SEOUL, May 7 South Korean shares erased earlier
gains and ended down 0.4 percent on Tuesday, as the won
currency's strength dampened exporters, while caution ruled
ahead of the Bank of Korea's policy meeting and options expiry
later in the week.
The Korea Composite Stock Price Index ended at
1,954.35 points, down for a second-straight session but still up
about 3 percent from mid-April when the market hit a 5-month
"The market is taking a breather as the won's strength has
prompted profit-taking on exporters in the auto sector in
particular," said Choi Un-sun, a market analyst at LIG
Investment & Securities.
Investors were also anxious to see whether the central bank
was willing to step up efforts to support the economy, said Cho
Byung-hyun, analyst at Tong Yang Securities.
The central bank's interest rate decision and the expiry of
monthly KOSPI index options are due on Thursday.
Foreign investors were sellers of a net 216.5 billion won
worth of stocks, offloading stocks for a fourth-straight
Automakers led declines, with Hyundai Motor
falling 2.3 percent and Kia Motors down 2 percent.
"There are talks weekend shifts are not being enforced,"
said Ryu Yeon-hwa, an analyst at IM Investment & Securities,
adding that would negatively affect manufacturing efficiency.
Weakness in the yen was also hurting automakers as it
renders Japanese cars more price-competitive. The yen bounced
back from a 10-day low versus the dollar on Japanese exporters'
buying after a long weekend in Japan, though many traders expect
the currency to stay under pressure.
Telecommunication stocks rallied. SK Telecom
rose 3.4 percent and KT finished up 1.3 percent.
LG Uplus, the third-biggest wireless carrier in
South Korea, surged 3.5 percent and was the most heavily traded
share on the main KOSPI.
Wireless carriers were seen posting stronger earnings in the
second quarter as they continue to slash marketing costs, said
Steve Hwang, an analyst at Hana Daetoo Securities.
Airlines and tour issues advanced as warm weather sparked
prospects for summer vacation travel amid expectations that
strength in the local currency could also fuel demand.
Korean Air Line climbed 1.5 percent and Hana
Tour, an on-and-offline tour agency, ended up 3.1
Technology exporters lost ground on the back of the won
currency's strength. The won steadied on Tuesday after
hitting an 8-week high on Monday.
Samsung Electronics fell 1.4 percent and SK
Hynix lost 1 percent.
Chemical shares continued to climb as crude oil
prices rallied to a one-month high, pointing to strength in
SK Chemicals advanced 1.7 percent and Samsung
Fine Chemicals gained 1.5 percent.
The KOSPI 200 benchmark of core stocks erased 0.5
percent while the junior KOSDAQ finished up 1.2 percent.
(Reporting by Jungyoun Park; Editing by Jacqueline Wong)