September 16, 2011 / 7:11 AM / 6 years ago

Seoul shares jump as foreign investors turn net buyers

* Foreign investors buy after 8 selling sessions

* Banks, brokerages post sharp rebounds

* Defensive issues, Kolon decline

By Jungyoun Park

SEOUL, Sept 16 (Reuters) - Seoul shares extended gains to close 3.7 percent higher on Friday, lifted by rallies in banks and brokerages as coordinated efforts by major central banks soothed jitters about the euro zone debt crisis.

Foreign investors turned net buyers for the first time in nine sessions, picking up a net 82.7 billion won ($74.07 million) worth of stocks.

The Korea Composite Stock Price Index (KOSPI) ended up 3.72 percent at 1,840.10 points.

"Investors are breathing again following harrowing developments in Europe, as they grow more hopeful about the eventual resolution of euro zone's debt issues," said Cho Sung-joon, an analyst at SK Securities.

"I see foreign investors renewing their interest in Seoul stocks, or slowing their selloff at the very least," Cho added.

Financial issues rallied after falling sharply in the previous session, tracking their U.S. and European peers after news that top central banks would coordinate a plan to ease dollar funding for stricken European banks.

Woori Finance Holdings jumped 7.4 percent while Hana Financial Group rose 6 percent.

Investors also snapped up beaten-down brokerage issues, with Woori Investment & Securities rallying 10 percent and Samsung Securities gaining 6.2 percent.

GS Engineering & Construction Corp firmed 8.1 percent, leading gains in the sector, after the builder said it had won a 603 billion won ($540 million) project from Kuwait Oil Company.

Samsung Electronics finished up 3.5 percent and LG Display spiked 7.6 percent.

Nomura forecast in a report on Friday Samsung Electronics' operating profit for the third quarter would "come in substantially higher than the market's lowered expectation as growth in smartphone and its related components should be higher than the market's consensus."

"We believe the DRAM and LCD businesses, which have been trending downward since 2H10, have limited downside from here," the brokerage said.

Bucking the market trend, shares in Kolon Industries extended their slide, falling 10 percent, after a U.S. federal jury ordered the firm to pay $919.9 million in damages to DuPont .

Defensive plays also underperformed as interest in safer bets waned.

Shares in KT&G , a tobacco firm, fell 2.5 percent and snack maker Orion Corp shed 2.1 percent.

Companies involved in the smart grid business surged by the daily limit after electricity shortages caused widespread blackouts across South Korea.

"The smart grid technology helps store power that can be used in an emergency. If (state utility) KEPCO had stored surplus electricity, there would have been no big confusion yesterday," said Han Seul-kee, an analyst at Woori Investment & Securities.

Shares in Nuri Telecom rose 4.8 percent and PS Tec gained 1.8 percent.

KOSPI 200 December futures KSc1 rose 3.85 percent to 239.0 points.

The KOSPI 200 spot index advanced 3.9 percent to 237.50 and the junior Kosdaq market finished up 2.83 percent to 467.84 points.

Move on day +3.72 percent

12-month high 2,231.47 27 April 2011

12-month low 1,684.68 9 August 2011

Change on yr -10.3 percent

All-time high 2,231.47 27 April 2011

All-time low 93.10 6 January 1981 (Editing by Jonathan Hopfner)

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