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Seoul: Stocks end lower as Draghi remarks dim rate-cut hopes

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[SEOUL] South Korean shares slipped on Friday after European Central Bank chief Mario Draghi's remarks deflated expectations of a more dovish stance by major central banks. The Korean won and the benchmark bond yield also fell.

The Seoul stock market's main KOSPI index ended down 8.22 points or 0.40 per cent at 2,066.26 points. For the week, the benchmark index lost 1.34 per cent.

The ECB signalled its intention to explore monetary easing but left interest rates unchanged on Thursday, and Draghi sounded more upbeat on the economy than investors expected.

He said the risk of a recession in the euro zone was "pretty low", policymakers did not discuss interest rate cuts at Thursday's meeting and they would wait for more data before "taking action."

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Reactions towards Draghi's remarks were mixed, said Cho Byung-hyun, an analyst at Yuanta Securities Korea. Following his comments, markets viewed that rate cuts by major central banks could fall short of expectations, he added.

Shares of LG Household & Healthcare plunged 6.4 per cent as its cosmetic business slowed after posting rapid growth for years. This sent the chemicals sub-index down 0.6 per cent.

South Korea's July consumer sentiment fell to an eight-month low at 95.9, slowing from 97.5 in a month ago, the Bank of Korea said.

Meanwhile, North Korea's economy shrank in 2018 for a second straight year, and by the most in 21 years, as it was battered by international sanctions aimed at stopping its nuclear programme and by drought, South Korea's central bank said.

Foreigners were net buyers of 58.3 billion won worth of shares on the main board. The won was quoted at 1,184.8 per dollar on the onshore settlement platform, 0.28 per cent lower than its previous close at 1,181.5. The currency dropped 0.9 per cent from a week ago.In offshore trading, the won was quoted at 1,184.6 per U.S. dollar, down 0.1 per cent from the previous day, while in non-deliverable forward trading its one-month contract was quoted at 1,183.5 per dollar.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.51 per cent, after US stocks closed down. Japanese stocks fell 0.45 per cent.

The Kospi has risen 1.24 per cent so far this year, but lost 1.4 per cent in the previous 30 trading sessions.

The current price-to-earnings ratio is 12.10, the dividend yield is 1.28 per cent and the market capitalisation is 1,242.04 trillion won.

The trading volume during the session on the Kospi index was 583.33 million shares and, of the total traded issues of 892, the number of advancing shares was 179.

The won has lost 5.8 per cent against the U.S dollar so far this year.

In money and debt markets, September futures on three-year treasury bonds fell 0.04 points to 110.83, while the three-month Certificate of Deposit rate was quoted at 1.54 per cent.

The most liquid three-year Korean treasury bond yield fell by 0.2 basis point to 1.304 per cent, while the benchmark 10-year yield fell by 1.0 basis point to 1.423 per cent. 

REUTERS