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Seoul: Stocks erase gains as bets of steep US rate cuts fade

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[SEOUL] South Korean shares pared early gains to trade almost flat on Monday, as brisk US jobs data tempered expectations of steep rate cuts amid persistent concerns over the trade war between the United States and China.

The won inched higher, while the benchmark bond yield fell.

The US unemployment rate dropped to near a 50-year low of 3.5 per cent in September, with job growth increasing moderately, suggesting the slowing economy could avoid a recession for now despite trade tensions that are hammering manufacturing. 

Following the US unemployment data, expectations gathered pace that the Federal Reserve may delay its rate cut, said Lee Young Gon, an analyst at Hana Financial Investment. Lingering worries about the Sino-US trade talks also capped gains, he added.

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Chinese officials are signalling that they are increasingly reluctant to agree to a broad trade deal pursued by US President Donald Trump, ahead of negotiations this week that have raised hopes of a potential truce, Bloomberg reported citing people familiar with the discussions.

South Korean shares exposed to North Korea plunged after working-level talks between Washington and Pyongyang were broken off on Saturday, weighing on the broader markets.

As of 0211 GMT, the Seoul stock market's main Kospi rose 1.23 points, or 0.06 per cent, to 2,021.92, after rising as much as 0.7 per cent earlier in the session.

Foreigners were net buyers of 1.2 billion won (S$1.38 million) worth of shares on the main board.

The won was quoted at 1,196.4 per US dollar on the onshore settlement platform, 0.03 per cent higher than its previous close at 1,196.8.

In offshore trading, the won was quoted at 1,196.2 per US dollar, down 0.4 per cent from the previous day, while in non-deliverable forward trading its one-month contract was quoted at 1,195.4 per US dollar.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.13 per cent, after US stocks jumped. Japanese stocks fell 0.28 per cent.

The Kospi has fallen 0.92 per cent so far this year, but gained 3.1 per cent in the previous 30 trading sessions.

The trading volume during the session in the Kospi index was 131.77 million shares and, of the total traded issues of 885, the number of advancing shares was 288.

The won has lost 6.7 per cent against the US dollar so far this year.

In money and debt markets, December futures on three-year treasury bonds rose 0.01 point to 111.10, while the three-month Certificate of Deposit rate was quoted at 1.55 per cent.

The most liquid three-year Korean treasury bond yield rose by 0.6 basis point to 1.216 per cent, while the benchmark 10-year yield fell by 0.7 basis point to 1.366 per cent.

REUTERS