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Seoul: Stocks, won shrug off cancellation of Trump-Kim summit

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[SEOUL]  South Korean shares ended slightly lower and the won pared earlier losses to end higher on Friday, reacting calmly to US President Donald Trump's cancellation of a summit with North Korea after Pyongyang's measured response to the announcement.

Some market players said they remained hopeful there still will be a summit eventually between Trump and North Korean leader Kim Jong Un. The Korea Composite Stock Price Index (KOSPI) closed down 0.2 per cent at 2,460.80 points. For the week, the index shed 0.7 per cent.

The won ended trade at 1,078.0 against the dollar, up 0.2 per cent versus Thursday's close of 1,079.6. The currency barely moved on a weekly basis.

"Other than some of those North Korea-related stocks, overall the KOSPI is doing fine," said Seo Sang-young, a stock analyst at Kiwoom Securities, adding that many investors are hopeful a summit is not derailed indefinitely.

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North Korea said it hoped for a "Trump-style solution" to resolve the standoff over its nuclear weapons programme. Seoul-listed stocks linked to North Korea took hits. Hyundai Elevator, the top shareholder in Hyundai Asan, which operated tours to North Korea's Mount Kumgang, was down 16.8 per cent.

Hyundai Rotem, manufacturer of railway vehicles, dropped 19.2 per cent. South Korea's railway-related shares had a big rally when leaders of South Korea and China agreed that North Korea should be guaranteed economic aid if it were to undertake complete denuclearisation. But market heavyweights such as Samsung Electronics and SK Hynix , which usually fall when there are political tensions over the Korean peninsula, were up 2.5 per cent and 0.6 per cent, respectively.

Despite the summit cancellation, offshore investors were on track to be net buyers for the day, purchasing 332.1 billion Korean won of KOSPI shares near mid-session. Declining issues outnumbered advancing ones 707 to 144. The spread on South Korea's five-year credit default swap , the contract that offers investor protection against default on debt - stepped down to 44.01 basis points after starting at 45.25 basis points. June futures on three-year treasury bonds held steady 107.85.

REUTERS

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