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Seoul: Stocks, won rise ahead of Fed decision; shrug off global uncertainties

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[SEOUL] South Korea's Kospi stock index and the won gained on Wednesday as investors await the US Federal Reserve's decision on interest rates, while the market shrugged off global uncertainties. South Korean bond yields fell across the board to the lowest in more than a year.

The Fed is expected to raise interest rates on Wednesday, but may cut the number of hikes it anticipates next year and signal an earlier end to its monetary tightening in the face of financial market volatility and rising recession fears.

A rate hike on Wednesday could draw the ire of the White House. US President Donald Trump has repeatedly attacked the Fed for raising rates this year, saying it was undercutting his efforts to boost the economy. On Tuesday, Mr Trump warned Fed policymakers not to "make yet another mistake".

The United States and China are planning to hold meetings in January to "document an agreement" on trade, US Treasury Secretary Steven Mnuchin told Bloomberg in an interview on Tuesday.

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Italy has done a deal with the European Commission over its contested 2019 budget, a spokesman at the Economy Ministry said on Tuesday, signalling an end to weeks of wrangling that had shaken financial markets.

At 06.32 GMT, the KOSPI closed up 16.73 points or 0.81 per cent at 2,078.84, towed by gains in Hyundai Motor Co Ltd and LG Chem Ltd.

Shares of Hyundai Motor soared as much as 4.7 per cent to highest since Oct 8, while its affiliate Hyundai Mobis rose 3.5 per cent on higher expectations for next year. Hyundai Motor's striking new model, Palisade, has improved the brand image of being well-balanced, said Kwon Soon-woo, an analyst at SK Securities.

South Korea's top chemical firms LG Chem and Lotte Chemical Corp each jumped more than 4 per cent, while the country's largest airline Korean Air Lines Co Ltd gained as much as 3.8 per cent to its highest level since May 15.

Shares of hydrogen-powered car parts companies gained after South Korean government announced a plan to expand the use of hydrogen fuel-cell cars and raise subsidies for the vehicles. Iljin Diamond Co Ltd and GMB Korea Corp surged 13.4 per cent and 29.9 per cent, respectively.

The won was quoted at 1,123.5 per dollar on the onshore settlement platform, 0.54 per cent firmer than its previous close at 1,129.6.

In offshore trading, the won was quoted at 1,122.39 per US dollar, up 0.37 per cent from the previous day, while in one-year non-deliverable forwards it was being asked at 1,104.45 per dollar.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.54 per cent, after US stocks ended the previous session with gains. Japanese stocks weakened 0.6 per cent.

The KOSPI is down around 16.4 per cent so far this year, and down by 1.32 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 412,554,000 shares and, of the total 894 traded issues, the number of advancing shares was 531.

Foreigners were net buyers of 19,973 million won worth of shares.

The US dollar has risen 5.25 per cent against the won this year. The won's high for the year is 1,053.55 per dollar on April 2 and the low is 1,146.26 on Oct. 11.

In money and debt markets, March futures on three-year treasury bonds rose 0.06 points to 109.38.

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 1.786 per cent, lower than the previous day's 1.80 per cent.

REUTERS