Seoul shares fall, nervy over N.Korea, cautious over Bernanke

Wed Jul 18, 2012 1:10pm IST

* KOSPI briefly spooked by sudden N.Korea announcement
    * Major banks fall after probe on suspected collusion
    * SK Hynix tumbles after chipmaker peer Intel cuts outlook
    * Woongjin Energy slumps on terminated supply contract

    July 18 (Reuters) - Seoul shares fell on Wednesday on
caution ahead of U.S. Federal Reserve Chairman Ben Bernanke's
second day of congressional testimony, as investors had already
suffered an attack of nerves brought on by North Korea saying it
had an "important announcement".
    The Korea Composite Stock Price Index (KOSPI) fell
1.48 percent to close at 1,794.91 points, just below the key
psychological level of 1,800 points.
    South Korean financial markets were briefly rocked, the main
index fell more than one percent, after North Korea's state
media said it would issue an "important report" at 0300 GMT.
    Shares later recovered to earlier levels after state media
reported that North Korean leader Kim Jong-un would be marshal
of the country's army.
    The respite was shortlived, and shares fell in afternoon
trade as caution set in ahead of Bernanke's final day of
testimony.
    "Investors may be on the backfoot ahead of Bernanke's speech
and the unexpected noise from North Korea didn't help either,
but today's sharp decline seems to have been exaggerated by thin
trade," said Park Seung-jin, an analyst at Samsung Securities.
    Cyclicals underperformed, with shipyards hardest hit after
investors were provided with few clues as to whether the Fed was
moving was closer to another round of easing to bolster the
flagging U.S. economy.
    Samsung Heavy Industries and Daewoo Shipbuilding
& Marine Engineering both slumped 4.9 percent.
    Financials weighed, with declines steepening after South
Korea's anti-trust agency launched a probe into the nation's top
four commercial banks as part of a widening investigation into 
suspected collusion in setting certificate of deposit
rates. 
    All four banks fell more than 2 percent, with Hana Financial
Group logging the heaviest decline of 2.7 percent
while Woori Finance Holdings fell 2.6 percent.
    SK Hynix, the world's No.2 computer memory chip
maker, sank 4.9 percent after top chipmaker Intel Corp 
reduced its growth forecast, reinforcing fears that a wavering
global economy is dampening personal computer
sales.  
    Shares in Woongjin Energy tumbled 5.1 percent
after saying its 58.5 billion won, long-term contract to supply
polysilicon wafters to ARISE Technologies Deutschland GmbH had
been terminated.
   Investors are keeping a busy eye on a slew of U.S. earnings
this week, with Coca-Cola and Goldman Sachs 
joining the growing roster of S&P companies to beat profit
forecasts, although expectations had been significantly lowered.
   South Korea's earnings season will be in full swing on
Friday, beginning with POSCO, the world's
third-largest steelmaker. 

         Move on day                -1.48 percent      
         12-month high   2,192.83   8 July 2011                 
         12-month low    1,644.11   26 Sept 2011                
         Change on yr               -1.68 percent               
         All-time high   2,231.47   27 April 2011               
         All-time low       93.10   6 January 1981   

 (Reporting by Joonhee Yu; Editing by Simon Cameron-Moore)