Seoul: Shares rally on FTA agreement with China; won higher after US jobs data

[SEOUL] South Korean shares climbed more than 1 per cent on Monday, buoyed by hopes that a free trade agreement reached with China, South Korea's largest trading partner, could bring a windfall to Asia's fourth-larget economy.

China and South Korean "effectively" reached a free trade agreement on Monday morning after President Park Geun-hye held talks with Chinese President Xi Jinping on the sidelines of the APEC summit in Beijing, an official at the presidential Blue House said by telephone.

"The free trade agreement could add between 0.92 per cent and 1.25 per cent to South Korea's GDP in 5 years, with shipping and automobile-related firms being the largest beneficiaries," said An Ki-tae, an analyst at Woori Investment & Securities.

The Korea Composite Stock Price Index (KOSPI) was up 1.27 per cent at 1,964.50 points as of 0200 GMT, lingering just below a 1-month intraday high.

Overall gains were led by a broad advance in blue-chip exporters, as Samsung Electronics climbed 4.1 per cent while Hyundai Motor rose 4 per cent.

The large-cap rally helped push the benchmark KOSPI 200 index 1.6 per cent higher, outpacing the wider market.

Other notable winners included shares sensitive to Chinese demand such as cosmetics makers. Hankook Cosmetics jumped 7.9 per cent, although Amorepacific fell 3.1 per cent with investors cautious ahead of its third-quarter earnings later in the day.

The South Korean won firmed against the dollar, poised to snap a 7-day losing streak after US employment data released on Friday fell short of lofty expectations, prompting investors to take profits on recent gains in the greenback.

The won was quoted at 1,084.5 to the dollar as of 0200 GMT, compared to Friday's closing rate of 1,093.7.

"Investors are clearing long positions in the dollar that have been amassed heavily of late, but wariness of the government surrounding a weakening yen may peg further gains in the won," said Hong Seok-chan, an FX strategist at Daishin Economic Research Institute.

US jobs data showed solid employment growth in October while unemployment fell to a six-year low of 5.8 per cent, although trailing expectations and taking some of the shine off the dollar which had powered to a 4-1/2 year high.

December futures on three-year treasury bonds shed 3 basis points to trade at 108.20.

REUTERS