Seoul shares down 3.16 pct in late-morning trade

SEOUL, Sept. 22 (Yonhap) -- South Korean stocks traded 3.16 percent lower late Thursday morning as investor sentiment was hit by the Federal Reserve's bleak assessment of the U.S. economy and credit downgrades on major U.S. banks, analysts said.
The benchmark Korea Composite Stock Price Index (KOSPI) tumbled 58.65 points to 1,795.63 as of 11:20 a.m.
After a two-day policy meeting, the Fed said on Wednesday it will sell short-term Treasury bonds worth US$400 billion to purchase the same amount of longer-dated securities by the end of June next year. The move aims to drive down long-term borrowing costs without further bloating its balance sheet.
The Fed warned of "significant downside risks to the economic outlook, including strains in global financial markets."
Adding to concerns about the global recovery, Moody's lowered ratings for Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. on Wednesday.
The KOSPI fell as much as 3.22 percent in early morning trade as investors fretted about increasing risks of the global recession and contagion fears about Europe's debt problems.
Seoul markets lost ground across the board. Bank shares were hit hard with top banking group KB Financial Group falling more than 5 percent.
The local currency was trading at 1,178.30 won to the greenback as of 11:20 a.m., down 28.40 won from Wednesday's close.
According to the finance ministry, Finance Minister Bahk Jae-wan advised the government to closely monitor the global financial markets as herd behavior in any direction is not desirable.
The dollar gained ground on expectations that the Fed's move would prompt more capital to flow into its bond markets, raising demand for the greenback.
sooyeon@yna.co.kr
(END)