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Seoul stocks plunge on US manufacturing shock, Hong Kong unrest

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[SEOUL] South Korean shares slumped nearly 2 per cent on Wednesday as investors worried about a slowdown in the United States and heightened political risks in Hong Kong. The won and the benchmark bond yield fell.

US manufacturing activity tumbled to a more than 10-year low in September, as lingering trade tensions weighed on exports, further heightening financial market fears of a sharp slowdown in economic growth in the third quarter.

Hong Kong police shot a teenage protester on Tuesday, the first to be hit by live ammunition in almost four months of unrest in the Chinese-ruled city, amid violent clashes on the 70th anniversary of the founding of the People's Republic.

The Kospi ended down 40.51 points, or 1.95 per cent, at 2,031.91, posting its lowest close since Sept 9.

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US slowdown worries triggered a large selloff, while Hong Kong unrest also hit sentiment, said Seo Sang-young, an analyst at Kiwoom Securities. North Korea's latest missile launch had a limited impact on domestic markets, as the missile was not considered as a threat to the United States, he added.

North Korea fired a missile off its east coast on Wednesday that South Korea said may have been launched from a submarine, a day after it announced the resumption of talks with the United States aimed at ending its nuclear programme. Foreigners were net sellers of 116.3 billion won worth of shares on the main board.

The won was quoted at 1,206.0 per dollar on the onshore settlement platform, 0.58 per cent lower than its previous close at 1,199.0.

In offshore trading, the won was quoted at 1,206.6 per US dollar, down 0.3 per cent from the previous day, while in non-deliverable forward trading its one-month contract was quoted at 1,205.6 per dollar.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.77 per cent, after US stocks declined. Japanese stocks fell 0.49 per cent.

The Kospi has fallen 0.45 per cent so far this year, but gained 7.5 per cent in the previous 30 trading sessions.

The trading volume during the session in the Kospi index was 406.20 million shares and, of the total traded issues of 890, the number of advancing shares was 181.

The won has lost 7.5 per cent against the dollar so far this year.

In money and debt markets, December futures on three-year treasury bonds rose 0.06 points to 110.81, while the three-month Certificate of Deposit rate was quoted at 1.55 per cent.

The most liquid three-year South Korean treasury bond yield fell by 2.0 basis points to 1.303 per cent, while the benchmark 10-year yield fell by 0.6 basis points to 1.493 per cent.

South Korean financial markets will be closed on Thursday for a public holiday. Markets will resume normal trading on Friday, Oct 4.

REUTERS