Seoul shares nosedive 5.73 pct on global recession woes

SEOUL (Yonhap) - South Korean stocks tumbled 5.73 percent on Friday as investors were spooked by fears about the global economic recession stemming from a stagnant U.S. growth and the eurozone debt woes, analysts said. The local currency rose against the U.S. dollar.
The benchmark Korea Composite Stock Price Index (KOSPI) plunged 103.11 points to close at 1,697.44. Trading volume was moderate at 407.1 million shares worth 7.44 trillion won (US$6.31 billion) with losers outpacing gainers 832 to 51.
"Panic selling revived on concerns about the recession woes. The ongoing eurozone debt crisis shows that it is urgent to capitalize banks in Europe," said Oh Hyun-suk, a senior analyst at Samsung Securities Co.
Lee Jae-man, a market analyst at Tong Yang Securities Co., shared the view that investor sentiment remained highly fragile amid the eurozone debt crisis and concerns about the health of European banks.
"There is not much hope of European politicians solving the eurozone debt problem or coordinating a viable solution," Lee noted, adding that the Seoul market may likely face high volatility next week.
Global financial markets were in gyration as investors were gripped by fears that the global economy may slide back into a recession, hit by the sputtering recovery in the U.S. economy and the eurozone debt crisis.
China's economic data added to recovery woes as its manufacturing sector contracted for the third straight month in September in a sign that its monetary tightening measures might have curbed growth.
Moody's Investors Service on Friday lowered ratings on eight Greek banks by two notches, pointing to worries that Europe's debt crisis is striking the health of banks in the region.
The KOSPI extended losses, falling to as low as 1,697.39 at one point, driven by institutional and foreign sell-offs. Foreign investors sold a net 679.8 billion won worth of Seoul shares on the main bourse.
U.S. markets plunged on Thursday on recovery woes. The Dow Jones industrial average declined 3.51 percent and the tech-laden Nasdaq Composite Index fell 3.25 percent.
Most shares traded in negative territory, led by banks, carmakers and steepmakers.
Top banking group KB Financial Group tumbled 7.24 percent to 34,600 won and its rival Shinhan Financial Group lost 9.06 percent to 36,150 won.
Leading carmaker Hyundai Motor shed 4.83 percent to 197,000 won and its affiliate Kia Motors fell 5.45 percent to 67,700 won.
Shipper Hanjin Shipping declined by the daily limit of 15 percent to 13,700 won and leading steelmaker POSCO lost 6.22 percent to 362,000 won.
After gyration, the local currency closed at 1,166 won to the greenback, up 13.8 won from Thursday's close as foreign exchange authorities intervened in the market to curb the won's weakness by selling the greenback, dealers said.
Before the market open, the finance ministry and the Bank of Korea said in a joint statement that South Korea will take actions to respond to any "irregular movement" in the currency market, calling the recent currency market action "excessive."
The South Korean government is determined to smooth excessive movements of the local currency. Last week, the finance ministry made its first verbal market intervention in 17 months.
The Korean won underwent high volatility as it shot up as high as 1,150 won to the dollar as soon as the market opened. Despite authorities' warning, it reversed earlier gains, extending losses to an intra-day low of 1,196 won per the dollar.
But the local currency changed course near the market close on suspected dollar-selling intervention, according to dealers.