Seoul shares end up 0.26 pct on institutional buying

(ATTN: ADDS bond yields at bottom)
SEOUL, July 27 (Yonhap) -- South Korean stocks finished 0.26 percent higher on Wednesday as institutions snapped up shares, betting that U.S. lawmakers would agree on a debt-ceiling hike, analysts said. The local currency rose against the U.S. dollar.
Wiping out earlier losses, the benchmark Korea Composite Stock Price Index (KOSPI) added 5.61 points to 2,174.31. Trading volume was moderate at 293 million shares worth 6.23 trillion won, with gainers leading losers 464 to 374.
Investors who are bullish about seeing a breakthrough in the U.S. debt-ceiling talks outweighed those who are not, analysts said.
"Despite the political stalemate in Washington and declines in the U.S. market, investors seemed to believe that there will somehow be a resolution before the deadline," said Lee Kyung-soo, an analyst at Shinyoung Securities Co.
Institutional investors added a net 282.9 billion won worth of local stocks while foreign investors were net sellers of 38.4 billion won.
Auto exporters lent support to the market with top car maker Hyundai Motor climbing 2.1 percent to 243,000 won and its smaller affiliate Kia Motors increasing 1.02 percent to 79,400 won.
LG Electronics, the world's third-largest cell phone maker, rose 2.57 percent to 83,800 won after reporting second-quarter earnings that showed a faster-than-expected improvement in its mobile business.
Chipmakers, however, staged a bearish run as prices of dynamic random access memory (DRAM) chips renewed a record low. Market bellwether Samsung Electronics was down 0.59 percent to 845,000 won, and the world's second-largest memory chip maker, Hynix Semiconductor, slumped 2.86 percent to 23,800 won.
The local currency closed at 1,050 won to the greenback, up 1.1 won from Tuesday's close, setting a new closing high for this year.
Investors shunned the U.S. dollar on uncertainties about the debt-ceiling deadlock and a risk of default in the world's largest economy, said Sun Yoo, a market analyst at Woori Investment & Securities Co.
Bond prices, which move inversely to yields, closed higher. The yield on three-year Treasuries shed 0.02 percentage point to 3.82 percent and the return on the benchmark five-year government bonds lost 0.02 percentage point to 4 percent.
ylee@yna.co.kr