S Korea Shares End Down On Pft-Taking On Weak US, China Mkts

South Korean shares closed lower Tuesday as overnight weak finish on Wall Street and sharp declines in China stocks led investors to take profits.

The Korea Composite Stock Price Index, or Kospi, lost 10.84 points, or 0.7%, to 1601.38.

"It was natural to see investors locking in profits after (local) blue chips and the main index rose sharply in the short period" since late last week, said Oh Hyun-seok, an analyst at Samsung Securities.

Most blue-chip bank, technology and auto stocks retreated after showing a strong performance again in the previous day.

"But the sentiment was not that bad despite the sharp declines in China markets. Bullish sentiment seems to have taken control of the market. There seem to be more people waiting to enter the market on dips than people waiting to take profits," added Oh.

Foreigners and local retail investors were net buyers of shares worth KRW194.4 billion and KRW244.1 billion, respectively. But domestic institutions offloaded a net KRW400.8 billion worth of stocks on still-high demand for fund redemption, said analysts.

Market analysts also expect U.S. financial markets to react positively to news that U.S. President Barack Obama will reappoint Ben Bernanke for a second four-year term as Chairman of the Federal Reserve.

Bernanke's reappointment will remove the risk of any change in the current policy stance and potential miscommunication with a new chairman, said Bae Sung-young, an analyst at Hyundai Securities.

The Kospi is expected to remain on an uptrend although its rising pace may slow down after recent steep gains in the broader index and blue chips, added Bae.

The local stock market will also likely to continue to be swayed by China markets, said Oh.

Investors will watch closely for cues from housing and consumer-related data due to be released this week.

Among banks, KB Financial Group retreated 2.9% to KRW54,400, and Woori Finance Holdings dropped 0.3% to KRW14,500.

Samsung Electronics fell 1% to KRW775,000, and Hyundai Motor dropped 0.9% to KRW106,500 - both after hitting historic peaks Monday.

LG Display rose 2.6% to KRW36,250 partly on news that it has signed a non-binding memorandum of understanding with the Guangzhou government in China to set up an advanced panel manufacturing plant that could cost more than US$3 billion, said analysts. link....