Seoul stocks slid 2.3 percent on Monday as renewed US recession fears hit exporters such as LG Electronics and financial firms fell on concerns about more write-downs in the global financial sector. Defensive plays boosted fixed-line carrier KT Corp while top auto makers recovered from early losses as solid February sales data provided support.
Mobile phone and appliance maker LG Electronics Inc, which generates about a quarter of total sales in North America, fell 3.3 percent to 99,600 won after losing more than 6 percent at one point. POSCO, the world's fourth-largest steel maker, fell 3.21 percent to 513,000 won on rising raw material prices. "Sharp losses in the US markets sent Asian shares lower," said Hwang Chang-joong, an analyst at Woori Investment & Securities. "Losses could deepen if the weak US economy leads to a further fall in the dollar and a rise in raw material prices."
The Korea Composite Stock Price Index finished 2.33 percent lower at 1,671.73 points, posting its biggest daily percentage loss since February 11. US shares tumbled on Friday after a drop in US consumer confidence to a 16-year low and a contraction in business activity in the auto-intensive US Midwest added more gloom to the bleak economic outlook.
Shipbuilders declined, hit by prospects of higher steel prices, with Samsung Heavy Industries Co falling 4.07 percent to 30,650 won and Daewoo Shipbuilding & Marine Engineering Co down 3.55 percent to 36,700 won.
Hyundai Motor Co ended down 0.15 percent at 66,700 won, recovering after falling as much as 2.7 percent, as it posted a 12 percent rise in February sales from a year earlier. Affiliate Kia Motors Corp rose 0.62 percent to 9,800 won. Kia's sales rose 2 percent in February.
Analysts said telecom and technology companies, less influenced by raw material cost worries, could post a rebound later this week if US markets stabilise. Memory chip maker Hynix Semiconductor Inc fell 5.09 percent to 23,300 won and top domestic lender Kookmin Bank shed 2.38 percent to 57,500 won.
Korea Exchange Bank declined 1.89 percent to end at 13,000 won. The bank dropped nearly 5 percent earlier in the session after the Financial Times reported that local financial regulators are not expected to approve HSBC's $6.3 billion acquisition by the April deadline.
Shipping firms held back from the slump, benefiting from a rise in a bulk shipping index. Korea Express rose 0.5 percent to 101,000 won and Korea Line Corp ended down 0.5 percent at 200,000 won. Kumho Tire, South Korea's No 2 tyre maker, climbed 1.79 percent to 11,350 won after it forecast a surge in 2008 operating profit.
Foreigners sold a net 242.3 billion won ($256.5 million) worth of shares on the main board, according to Korea Exchange data at 0630 GMT. Domestic institutions sold a net 118.1 billion won while retail investors bought a net 261.5 billion won worth.
Decliners led advancers by 676 to 129, with 68 titles ending unchanged. Trade volume stood at 233 million shares worth 4.15 trillion won against Friday's 312 million shares worth 4.3 trillion won. The March KOSPI 200 futures index shed 5.40 points to 211.50 and the underlying KOSPI 200 spot index declined 5.12 points to 211.73. The junior Kosdaq market fell 1.74 percent to 644.51.