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Seoul: Stocks, won slump on edginess over possible Fed rate hike

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[SEOUL] South Korean shares and the won sagged early on Monday on increased worries the Federal Reserve will hike US rates in September.

The Korea Composite Stock Price Index (Kospi) was down 0.5 per cent at 2,046.04 points as of 0212 GMT.

The won was quoted at 1,124.1, down 0.6 per cent compared with the previous close of 1,117.6. It touched 1,126.5, the weakest level since July 28.

Concerns about the Fed have increased ahead of its annual retreat in Jackson Hole, Wyoming, which begins on Thursday.

On Sunday, Fed Vice-Chair Stanley Fischer said it is close to hitting its targets for full employment and 2 per cent inflation.

Late last week, San Francisco Fed President John Williams joined a growing chorus of his colleagues signalling support for a US interest rate hike in the coming months, saying that waiting too long could be costly for the economy.

Park Seok-hyun, a stock analyst at Eugene Investment & Securities in Seoul, said that before the Jackson Hole gathering, "the Kospi's movement will be quite volatile waiting for additional hints on the Fed's next policy decision."

Offshore investors were set to be sellers for the day, offloading a net 48.7 billion Korean won (S$58.7 million) of Kospi shares near mid-session.

The sub-index for iron, steel and metal dropped 1.3 per cent with Posco losing 1.4 per cent.

Food and beverages index also declined more than 1 per cent with CJ Corp down 2.8 per cent.

Decliners outnumbered advancers 593 to 196.

September futures on three-year treasury bonds shed 0.02 point to 111.04.