South Korean bonds fall on large offers

SEOUL, May 13 (Reuters) - South Korean government bond prices
fell on Tuesday as the government and the central bank offered
large new issues and investors awaited signs of the market's
health after a rocky week.

The Bank of Korea sold 1.4 trillion won ($1.34 billion) of
two-year monetary stablisation bonds at 5.40 percent earlier in
the session. The central bank cut the auction size from the 2.5
trillion won it had planned to sell due to weak pricing, traders
said.

The central bank plans to sell additional 1.5 trillion won in
monetary stablisation bonds later on Tuesday, and seperately the
Finance Ministry sold 1.54 trillion won of five-year treasury
bonds at 5.35 percent.

By 0200 GMT, the yield on the benchmark five-year treasury
bond <KR5YT=KSDA> rose six basis points to 5.35 percent and the
three-year treasury bond yield <KR3YT=KSDA> climbed four basis
points to 5.26 percent.

The benchmark yield posted its largest gain in over five
months last Thursday after the central bank held interest rates
steady and made it clear controlling inflation was its top
priority, dashing hopes for an early rate cut.

South Korean financial markets were closed on Monday for a
public holiday.

June treasury bond futures KTBc1 fell 17 ticks to 107.28.
($1=1041.5 Won)
(Reporting by Rhee So-eui; editing by Jonathan Hopfner)