* Offshore funds continue to underpin the market
* Won moves within a narrow band amid intervention caution
SEOUL, May 28 South Korean shares bounced back
on Wednesday morning from the previous session's two-week
closing low, buoyed by robust U.S. economic indicators and
expectations for European Central Bank rate cuts supporting risk
The Korea Composite Stock Price Index (KOSPI) was up
0.4 percent at 2,005.84 points as of 0220 GMT, regaining the
psychologically important 2,000 point threshold. On Tuesday, the
index slipped to its weakest close since May 13.
"The bullish U.S. indicators have set the positive tone for
investors, who are basically using this week to prepare for next
week's ECB meeting," said Tong Yang Securities analyst Cho
Orders for U.S. manufactured durable goods unexpectedly rose
in April and consumer confidence perked up in May, supporting
views of a rebound in economic growth.
Investors are expecting the ECB to take policy easing steps,
propping up euro zone growth while supporting global liquidity.
Foreigners net-purchased 70 billion won ($68 million)worth
of KOSPI shares near mid-session, heading for the 12th
consecutive day of net purchases.
Samsung Electronics Co Ltd, the largest
component in KOSPI, rose 0.6 percent while its rival LG
Electronics Inc rose 2 percent on brightening
earnings prospects following the launch of its latest flagship
In the foreign exchange market, the won erased early modest
losses on demand by exporters for month-end settlements. The won
had weakened modestly against the greenback early in the session
on bullish U.S. economic data.
However, further gains were limited as investors were wary
of a possible dollar-buying intervention by the South Korean
foreign exchange authorities to stem the won's appreciation.
The local currency was quoted at 1,022.8 against
the dollar as of 0220 GMT, compared with Tuesday's onshore close
0220 GMT Prev close
Dollar/won 1,022.8 1,023.2
Yen/won 10.0393/343 10.0284
*KTB futures 106.09 106.04
KOSPI 2,005.84 1,997.63
* Front-month futures on three-year treasury bonds
($1 = 1023.2500 Korean Won)
(Reporting by Jungmin Jang; Editing by Eric Meijer)