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Seoul: Shares hit 3-week low; won falls on soft China PMI

South Korean shares reversed sharp early declines to close higher on Thursday while the country's currency pared losses against the dollar as the investor appetite for risk assets regained momentum.

[SEOUL] South Korean shares closed at their lowest in three weeks on the first day of trading in 2016, after tepid China factory data and weakening yuan fuelled risk-off mood.

Mounting tensions in the Middle East also worsened market sentiment.

The Korea Composite Stock Price Index (KOSPI) closed down 2.2 per cent at 1,918.76, posting its biggest daily percentage loss since Aug 24, 2015.

Foreigners were net sellers for a 21st consecutive session. During the period, they sold a net 3.5 trillion won (S$4.19 billion) of shares on the main board.

Tech giant Samsung Electronics Co Ltd's shares fell 4.4 per cent, marking its lowest closing level since Oct 6, 2015.

The South Korean won ended local trade down 1.3 per cent at 1,187.7 to the dollar, as traders suspected intervention by the foreign exchange authorities to curb the won's sharp decline.