Seoul shares up on easing oil prices and rate cut

Seoul shares closed 1.8 percent higher on Friday, as easing oil prices, gains on Wall Street and on Thursday's interest rate cut bolstered blue chips and domestic demand-focused stocks. Market leader Samson Electronics and other blue chips also got a boost from 330.5 billion won ($297.5 million) worth of year-end buying by institutional investors. The benchmark Korea Composite Stock Price Index (KOSPI) rose 1.79 percent to end at 876.67, its highest close since October 11 when it finished at 881.11.
The index finished 1.9 percent higher for the week. Comments by Finance Minister Lee Hun-jai that South Korea would probably see slower economic growth in the third and fourth quarters had no impact, analysts said.
"Gains were sparked by the rate cut, the rise in US markets, and the belief that oil prices will fall steadily," said Kim Hyun-tae, a fund manager at Wooer Investment Trust. South Korea's central bank unexpectedly cut interest rates to a record low of 3.25 percent on Thursday in a bid to boost flagging consumer demand.
Kim said institutions felt it was better to buy stocks than bonds for higher returns. The rate cut and data showing sales at South Korea's top three department store chains rebounded in October after two months of declines lifted Hyundai Department Store Co Ltd 5.68 percent to 33,500 won.
Shares in the world's largest chip maker, Smashing Electronics Co Ltd, ended up 2.63 percent at 448,500 won, while POSCO Co Ltd, the world's fifth-biggest steel maker, rose 2.32 percent to close at 176,500 won.
Shares in SK Telecom Co, South Korea's leading mobile operator, rose 2.56 percent to end at 200,000 won. Banking shares also rose, with top local lender Kokomo Bank gaining 3.27 percent to close at 41,050 won.
Declining crude oil prices eased concerns about the impact of higher energy costs on firms' earnings and already weak domestic demand in South Korea, the world's fourth-biggest oil importer.
Oil was trading at $47.57 a barrel in Asia, down from a record high of $55.67 a barrel hit on October 25. Shares in Hyundai Motor Co rose 2.57 percent to 55,800 won. But sports utility vehicle maker Snagging Motor Co fell 0.74 percent to 6,680 won after reporting a drop in quarterly profit.