August 21, 2012 / 7:22 AM / 5 years ago

Seoul shares drift lower as ECB uncertainty lingers

* Foreigner investors net buyers for an 11th straight day
    * Retailers soar as they enter busy shopping season
    * SK Hynix up 2.4 pct on hopes of DRAM price recovery
    * Ssangyong E&C falls on failed takeover bid by E-Land

    By Joonhee Yu
    SEOUL, Aug 21 (Reuters) - South Korean shares were slightly
lower on Tuesday for a third day as investors held off bets
until it was clear what steps the European Central Bank would
take to tackle the debt crisis in the euro zone.
    The Korea Composite Stock Price Index (KOSPI) fell
0.16 percent to close at 1,943.22 points as a month-long rally
appeared to be losing steam. 
    "It is difficult to expect euro zone member states to bridge
all of their differences over the debt-fighting strategy within
a short time frame, but supportive comments from Merkel are
keeping alive expectations of a positive eventuality," said IBK
Securities in a note to its clients.
    Hopes that the ECB will step in to ease borrowing costs for
Spain and Italy have taken the KOSPI to a string of three-month
highs in August, bolstered by German Chancellor Angela Merkel's
remarks voicing support for the ECB's crisis-fighting steps.
    The rally ground to a halt last Friday. 
    The ECB remained tight-lipped over the method and scale of
its eventual intervention, expected to take place as early as
September, while quashing a report from German magazine Der
Spiegel that the bank was planning to set a cap on bond yields,
above which it would buy government debt issued by member
states. 
    Net foreign buying, which has served as a backbone of the
latest rally, persisted on Tuesday with foreigners picking up a
net 179.6 billion Korean won ($158.1 million) worth of shares to
set an 11-day buying streak.
    Offshore investors have bought more than a net 4.5 trillion
won worth of South Korean equities since August 6, but some
analysts have flagged the presence of speculative short-term
bets, or hot money, as a possible source of volatility ahead. 
    Retailers advanced as they entered a busy holiday shopping
season ahead of a major harvest festival, with Shinsegae
 rallying 5.6 percent while Hyundai Department Store
 rose 2.8 percent.
    Shares in memory chip maker SK Hynix rose 2.4
percent on the back of expectations that DRAM prices could break
their downtrend on the way to stabilization and recovery in the
second half of 2012. 
    Ssangyong Engineering & Construction tumbled 3.5
percent after E-Land Group's proposed bid for the company was
scuppered following a breakdown in negotiations with major
shareholder Korea Asset Management Corp.
    Investors will be looking to the release of a slew of U.S.
housing data this week, which have recently shown signs of a
recovery, for broader signs of a turnaround in the world's
largest economy.
    
          Move on day                -0.16 percent              
          12-month high   2,192.83   8 July 2011                
          12-month low    1,644.11   26 Sept 2011               
          Change on yr               +6.43 percent              
          All-time high   2,231.47   27 April 2011              
          All-time low       93.10   6 January 1981 
($1 = 1135.5750 Korean won)

 (Reporting by Joonhee Yu; Editing by Sanjeev Miglsni)

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