South Korean bonds fall on oil; caution grows

Mon Aug 4, 2008 6:25am IST

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SEOUL, Aug 4 (Reuters) - South Korean bond prices fell early on Monday as firmer oil prices persuaded investors to book profits after a recent rally, but the mood was cautious ahead of the central bank's policy review later in the week.

By 0040 GMT, the yield on benchmark five-year treasury bonds was quoted up 3 basis points at 5.79 percent, while September treasury bond futures KTBc1 dropped 8 ticks to 105.81.

U.S. crude futures ended up $1.02 at $125.10 a barrel on Friday on concerns about Iran's nuclear dispute with the West and Nigerian supply snags.

The Bank of Korea reviews interest rates on Thursday. It held the policy rate steady at 5.0 percent for the past 11 months in a row, but recent growing inflation and resilient economic growth raised chances for a rate rise this week. (Reporting by Yoo Choonsik; editing by Jonathan Hopfner)

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