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Seoul: Stocks, won end lower as trade worries dent sentiment

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[SEOUL] South Korea's Kospi stock index ended weaker on Wednesday, tracking Wall Street lower, on mounting concerns over the Sino-US trade war. The South Korean won was the leading decliner among Asian currencies, while bond yields also edged lower.

Doubts on whether the two biggest economies could come to an agreement rose as US President Donald Trump threatened to place "major tariffs" on Chinese goods imported into the United States if his administration is unable to reach an effective trade deal with Beijing.

South Korea's economic slowdown and growing financial instabilities from neighbouring China have replaced household debt and a property boom as the top risks for industry experts, a central bank survey released on Wednesday showed.

Respondents were less concerned about household debt and property market instability, in line with broad analyst views that the case for an additional central bank rate hike next year is declining.

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At 0632 GMT, the Kospi ended down 13.04 points or 0.62 per cent at 2,101.31, extending its losses into a second session. Tech giant Samsung Electronics closed 1.7 per cent down, while the country's biggest steelmaker Posco ended 2.4 per cent weaker.

The won was quoted at 1,114.1 per dollar on the onshore settlement platform, 0.79 per cent weaker than its previous close at 1,105.3.

Dampened outlook over South Korean economy compared with other neighbouring countries led the won to lead losses among Asian peers, said Choi Kwang-hyeok, analyst, Ebest Securities.

South Korea, which is a China-dependent economy, cannot help but fluctuate depending on the progress of the US-China trade war friction, added Mr Choi.

In offshore trading, the won was quoted at 1,113.93 per US dollar, down 0.31 per cent from the previous day, while in one-year non-deliverable forwards it was being asked at 1,094.65 per dollar.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 1.44 per cent, after US stocks ended the previous session with mild losses. Japanese stocks weakened 0.53 per cent.

The Kospi is down around 14.3 per cent so far this year, and up by 0.39 per cent in the previous 30 days.

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 484,114,000 shares and, of the total traded issues of 895, the number of advancing shares was 323.

Foreigners were net sellers of 197,020 million won worth of shares.

The US dollar rose 4.46 per cent against the won this year. The won's high for the year is 1,053.55 per dollar on April 2, and low is 1,146.26 on Oct 11.

In money and debt markets, December futures on three-year treasury bonds rose 0.06 points to 108.96.

The Korean three-month Certificate of Deposit benchmark rate was quoted at 1.9 per cent, while the benchmark three-year Korean treasury bond yielded 1.905 per cent, lower than the previous day's 1.91 per cent.

REUTERS