South Korea third quarter consumer sentiment weakest in 2005

South Korea's consumer sentiment index dipped to its weakest level this year in the third quarter, central bank data showed on Friday, undermining government optimism that a recovery in domestic demand will keep picking up.
The Bank of Korea's consumer survey index, measuring consumer sentiment in six categories including two on the economy, fell to 97 in the third quarter from 102 in the second. It was the lowest reading since the index hit 87 in the fourth quarter of 2004.
The central bank did not elaborate on the findings, based on its survey conducted from September 1-14, but the index showed the first reaction by consumers to government measures unveiled on August 31 to cool the real estate market.
Economists said high oil prices and wariness over the property measures were probably behind the weaker sentiment, but they did not expect the findings to directly influence the central bank's rate-setting policy meeting on October 11.
"I don't think property measures bore the main responsibility, but they were at least one factor together with the more important oil price rises," said Ryu Seung-sun, economist with Mirae Asset Securities.
"The central bank appeared so determined to raise rates that the sentiment data is unlikely to influence significantly whatever the central bank plans to do," he added.
A similar monthly consumer survey index from the National Statistical Office has also been falling every month since March this year, with the August reading touching a seven-month low.
The data failed to provide much relief to bond investors, who are jittery over the central bank's apparent determination to raise interest rates for the first time in over three years.
Bank of Korea Governor Park Seung ignited interest rate speculation on September 8 when he said the central bank would seriously consider a rate rise at its October policy meeting.
The yield on benchmark three-year treasury bonds rose to 4.68 percent by mid-session on Friday from 4.63 percent at Thursday's close, a rise of 41 basis points since Park's comment.