Seoul shares at three-week closing low

Seoul shares fell 2.9 percent to a three-week closing low on Monday, as worries that surging US inflation would prevent further interest rate cuts in South Korea's No 2 export market hurt exporters such as Hyundai Motor. Trading was thin ahead of the year-end holiday season, with just 277 million shares changing hands - a quarter less than the average daily trading volumes in November.
Analysts see little upward momentum until the new year as inflation worries add to jitters over US subprime troubles, but said the December 19 presidential election could give a boost to certain sectors that are likely to benefit from the successful candidate's policy.
"The surge in oil prices over the past months is beginning to bite. Inflation is likely to continue to edge up, limiting the room for aggressive rate cuts by the Federal Reserve," said Kang Mun-seok, an analyst at Korea Investment & Securities.
"I don't think there's strong enough momentum to pull the market out of the doldrums." The Korea Composite Stock Price Index fell 2.91 percent to 1,839.82 points, falling for a third consecutive session and marking its biggest daily percentage fall in a month.
US stocks swooned on Friday on concerns that surging inflation may prevent the Federal Reserve from lowering interest rates enough to pull the economy out of the grip of a housing and credit crisis. Exporters took a hit from the Wall Street performance, with the world's top memory chip maker Samsung Electronics Co Ltd falling 3.61 percent to 560,000 won.
Hyundai Motor Co, South Korea's biggest automaker, shed 3.87 percent to 69,500 won, and second-ranked Kia Motors Corp lost 2.91 percent to 10,000 won. POSCO Co Ltd, the world's fourth-largest steel maker, dropped 1.87 percent to 578,000 won after saying late on Friday it started in early December to reduce monthly stainless steel output by 20 percent, responding to slower demand.
Korea Plant Service and Engineering Co, a unit of state-run power provider Korea Electric Power Corp, tumbled 14.76 percent to 16,750 won, almost wiping out its entire 15 percent gain on Friday, its market debut.
Foreign investors sold a net 246.3 billion won ($264.9 million) worth of shares by 0619 GMT and local institutions offloaded a net 13.6 billion won. But retail investors bought a net 198.7 billion won. Trade volume fell to 277 million shares valued at 4.7 trillion won, compared with 300 million shares worth 5.3 trillion won on Thursday.
Decliners led advancers by 697 to 120, with 52 titles flat. The March KOSPI 200 futures index dropped 7.00 points to 233.00 and the underlying KOSPI 200 spot index fell 7.17 points to 234.33. The junior Kosdaq market shed 3.18 percent to 702.49.