July 22, 2013 / 2:17 AM / 4 years ago

Seoul shares gain 0.7 pct on China optimism; techs lead

4 Min Read

* China's liberalisation of bank lending rates buoy sentiment

* Foreign investors turn net buyers

* Automakers lag on weaker yen after Japan's Abe wins election

* Shipyards rally on recovery hopes

SEOUL, July 22 (Reuters) - Seoul shares rose on Monday morning, buoyed by news of China's decision to remove controls on bank lending rates, with technology heavyweights like Samsung Electronics Co Ltd leading gains.

At 0212 GMT, the Korea Composite Stock Price Index (KOSPI) was up 0.7 percent at 1,884.99 points, snapping a two-day losing streak.

"Two major global financial news over the weekend are helping the market today. One being more liberal bank lending rates, and second being G20 nations' vocal commitment to economic support," said Park Jung-seop, a market analyst at Daishin Securities.

The People's Bank of China said on Friday it was removing its floor on lending rates for commercial banks, meaning they will now be able to cut rates as much as they see fit to attract borrowers. The move raised hopes that cheaper credit will help support the softening economy.

China is South Korea's biggest export market.

The Group of 20 nations pledged on Saturday to put growth before austerity, seeking to revive a global economy that "remains too weak" and adjusting stimulus policies with care so that recovery is not derailed by volatile financial markets.

Foreign investors were buyers of a net 60.3 billion Korean won ($53.76 million) worth of stocks after two straight sessions of selling.

Technology heavyweights led early gains. Samsung Electronics, the largest component on the main KOSPI, rose 1 percent, and LG Display Co Ltd advanced 1.9 percent.

On the negative ledger, CJ Group shares weakened on local media reports the group is being investigated by the National Tax Service following a local court's recent decision to order the arrest of its chairman on charges of tax evasion and embezzlement.

A CJ Group spokesman confirmed the news when contacted by Reuters.

CJ Cheiljedang Corp shares declined 0.4 percent and CJ E&M Corp dipped 1.1 percent.

Shipyards rallied as latest string of new orders pointed to a long-awaited improvement in the ailing sector.

Hyundai Heavy Industries Co Ltd rose 4.8 percent, Daewoo Shipbuilding & Marine Engineering Co Ltd climbed 3.3 percent and Samsung Heavy Industries Co Ltd jumped 2.3 percent.

Auto stocks underperformed as the Japanese yen inched lower in Asia in early Monday trade, after a big win at the polls by Japanese Prime Minister Shinzo Abe gave the green light for prolonged monetary stimulus.

A weak yen tends to put South Korean exporters at a disadvantage against their Japanese rivals in overseas markets.

Hyundai Motor Co were flat, while Kia Motors Corp was up 0.2 percent.

Makers of baby clothes and infant care products rallied on reports their sales jumped on robust demand by Chinese tourists whose numbers have risen sharply this year.

Shares Agabang & Co and Boryung Medience Co Ltd each jumped by their daily limit of 15 percent.

The KOSPI 200 benchmark of core stocks rose 0.9 percent, while the junior KOSDAQ edged 0.5 percent higher.

$1 = 1121.7500 Korean won Reporting by Jungyoun Park; Editing by Shri Navaratnam

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