(Takes out extraneous word in the lead paragraph)
* Poll shows rates seen likely to stay on hold at Thursday
* Samsung's disappointing Q2 earnings guidance adds to
* Sales at major retailers likely fell in June
By Christine Kim
SEOUL, July 8 South Korea's nominee finance
minister vowed on Tuesday to focus on boosting consumer spending
and corporate investment to bolster a sagging economy, but
stopped short of calling on the central bank to consider cutting
While all but two of 26 analysts surveyed by Reuters late on
Tuesday forecast the Bank of Korea will keep the policy interest
rate unchanged at its July 10 meeting, a recent softening in
Asia's fourth largest economy has led to growing speculation
that the central bank could cut rates.
Most analysts polled on Tuesday, however, said the next rate
change would be an increase.
At a parliamentary hearing on Tuesday, Choi Kyung-hwan, 59,
a former economy minister and lawmaker, disappointed bond
investors who had hoped he would pressure the Bank of Korea to
cut interest rates to boost domestic demand.
Bond prices fell across the board on Tuesday as Choi
declined to comment when asked if he wanted the central bank to
lower interest rates.
"The South Korean economy is weak, and we had the ferry
sinking, while the global economy is facing stronger downside
risks than we thought," Choi said.
South Korea's economy grew 0.9 percent during each of the
previous two quarters on a sequential basis but recent
indicators show the economy lost much of its lustre in the
April-June quarter after the mid-April Sewol ferry disaster.
Choi did not elaborate on how to buoy domestic demand,
saying restrictions on property-backed borrowing would be eased,
modestly, given concerns that easier borrowing rules could add
to already heavy household debt.
Some of Choi's earlier remarks describing an urgent need to
stimulate domestic demand had fanned speculation among bond
investors that the government would put pressure on the central
bank to lower interest rates.
"Choi Kyung-hwan showed a neutral position on the interest
rate policy stance and I think he won't pressure the central
bank to cut interest rates," said Kim Min-gyu, a fixed-income
strategist at Kiwoom Securities.
Sales at the country's top three department store chains and
top three discount chains were estimated to have fallen in June
from a year earlier, swinging from growth in May, data showed on
Adding to the gloomy economic mood, smartphone giant Samsung
Electronics Co Ltd warned on Tuesday of weak
earnings for the second quarter, which put it on track for its
worst results in two years.
The manufacturer cited the strong won as a factor
behind its estimated 24.5 percent annual fall in operating
profit in the April-June period as the rising currency shrunk
the exchange value of dollar revenues.
The won's average dollar value in the second quarter shot up
by 9.1 percent over a year earlier, the fastest pace since the
third quarter of 2011, central bank data indicates.
The benchmark 10-year treasury bond yield rose
3.2 basis points to 3.159 percent and the 1-year yield
added 1.4 basis points to 2.563 percent.
Choi is due to start work as one of two deputy prime
ministers and Minister of Strategy and Finance later this week.
(Additional reporting by Se Young Lee and Yena Park; Writing by
Choonsik Yoo; Editing by Tony Munroe and Eric Meijer)