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Seoul: Stocks end higher on Brexit deal hopes; central bank cuts rates

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South Korean shares closed higher on Wednesday on rising hopes of a Brexit divorce deal, though worries over Sino-US trade relations capped gains. The won weakened, while benchmark bond yields rose after its central bank cut interest rates.

[SEOUL] South Korean shares closed higher on Wednesday on rising hopes of a Brexit divorce deal, though worries over Sino-US trade relations capped gains. The won weakened, while benchmark bond yields rose after its central bank cut interest rates.

The Bank of Korea cut its policy interest rate on Wednesday, as expected, and left the door open for further easing although a split vote on the move suggested the next reduction may not be imminent.

Two dissenting voters lowered expectation of a further rate-cut in the near future, said Park Sang-hyun, an analyst at HI Investment & Securities.

Reduced likelihood of a so-called "no-deal Brexit" relieved investors, Mr Park said, adding that Hong Kong issue capped the gains as it heightened worries over trade talks between the United States and China.

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Last-ditch talks between Britain and the European Union to get a Brexit deal ahead of a summit of the bloc's leaders this week went on past midnight to Wednesday, but it was still unclear if London could avoid postponing its departure due on Oct 31.

China's foreign ministry said that Beijing resolutely opposed new measures passed by the US House of Representatives related to the Hong Kong protests and urged lawmakers to stop interfering.

The Seoul stock market's main Kospi closed up 14.66 points, or 0.71 per cent, at 2,082.83.

Foreigners were net sellers of 46.3 billion won (S$63.4 million) worth of shares on the main board.

The won was quoted at 1,187.8 per dollar on the onshore settlement platform, 0.22 per cent lower than its previous close at 1,185.2.

In offshore trading, the won was quoted at 1,187.5 per US dollar, down 0.2 per cent from the previous day, while in non-deliverable forward trading, its one-month contract was quoted at 1,186.6 per dollar.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.50 per cent, after US stocks jumped . Japanese stocks also rose 1.20 per cent.

The Kospi has risen 2.05 per cent so far this year, and gained 6.5 per cent in the previous 30 trading sessions.

The trading volume during the session in the Kospi index was 513.81 million shares and, of the total traded issues of 889, the number of advancing shares was 504.

The won has lost 6.1 per cent against the dollar so far this year.

In money and debt markets, December futures on three-year treasury bonds fell 0.11 points to 110.68, while the three-month Certificate of Deposit rate was quoted at 1.37 per cent.

The most liquid three-year Korean treasury bond yield rose by 3.6 basis points to 1.313 per cent, while the benchmark 10-year yield rose by 1.8 basis points to 1.511 per cent. 

REUTERS