Seoul shares slide as soft data spooks investors

Seoul shares fell nearly 2 percent on Tuesday, as data showing South Korean factory output posted its sharpest drop in seven years in February delivered a blow to hopes a broader economic recovery was on the horizon. Investors reacted to the data by offloading futures, which triggered programme selling in excess of 200 billion won ($197 million) and sent index heavyweights such as KT Corp and LG Philips LCD Co Ltd lower. Foreign investors continued to reduce their exposure to the local market, ending net sellers of 21.5 billion won worth for a 19th consecutive session, analysts said.
The benchmark Korea Composite Stock Price Index (KOSPI) closed 1.92 percent lower at 958.96 points.
Samsung Electronics Co Ltd, the world's biggest maker of memory chips, fell 1.57 percent to 502,000 won and top local carmaker Hyundai Motor Co shed 1.22 percent to 56,700 won. LG.Philips LCD ended down 2.43 percent at 42,150 won.
"The February output data weakened investors' confidence that the economy is on the path for a solid recovery," said Park Suk-hyun, an analyst at Kyobo Securities. "Downside risks are now in focus."
The KOSPI may test 950 if US markets turn weaker, he added.
Telecom shares were among the heaviest losers, hit by concerns over possible fines.South Korea's antitrust watchdog said on Tuesday it would decide by next month whether to slap record fines on six fixed-line and Internet operators over charges of price fixing.
"The fines could further weaken profitability of local telecom companies, which already suffer from stalled or even declining profits," said Hyundai Securities in a report.
Shares in KT ended 3.73 percent lower at 40,050 won and Hanaro telecom Inc dropped 3.5 percent to 2,895 won.
South Korea's factory output fell a faster-than-expected 4.6 percent in February from January, data showed on Tuesday, sparking concerns a recovery in the economy may not be as strong as touted by the government.
Trading volume reached 512 million shares worth 2.1 trillion won compared to 608 million shares worth 2.1 trillion won on Monday. Losers led gainers by 558 to 183, with 56 titles ending flat.
Local institutions sold a net 167 billion won worth while retail investors bought a net 136.3 billion won.
The June KOSPI 200 futures index slid 3.70 points to 124.00, ending below the underlying KOSPI 200 spot index, which lost 2.59 points to 124.13.
South Korea's junior Kosdaq market shed 1.43 percent to 453.24.