(LEAD)S. Korea vows to stem uncertainty from N.K. rocket launch

SEOUL, Dec. 12 (Yonhap) -- South Korea plans to take preemptive measures to tackle possible market volatility as North Korea's defiant rocket launch could serve as downside risks to the economy, the finance minister said Wednesday. "The North Korean issue could always serve as a risk factor for the local economy. The government plans to closely monitor the markets and take necessary actions preemptively and swiftly in accordance with contingency plan scenarios," Finance Minister Bahk Jae-wan told an emergency meeting with other officials. Earlier in the day, North Korea fired off what it claimed was a rocket carrying a satellite, defying international pressure to call off the provocative act. Pyongyang's rocket launch came earlier than expected as the North announced on Monday that it was extending the 13-day launch window by one week until Dec. 29. "The North's move is expected to have a limited impact on the Seoul financial markets and the country's credit worthiness," Bahk said. The financial regulator echoed his view, saying that North Korea's rocket launch had a limited impact on South Korea's financial markets on Wednesday, but Seoul still plans to beef up monitoring to take heed to potential market volatility. "The rocket launch had limited impacts on the local financial markets as the move has been factored into the market," the Financial Services Commission (FSC) said in a statement. The Korean financial markets were mostly unfazed by the North's move as the launch dispelled uncertainty weighing on the market, analysts said. The key stock index rose 0.55 percent to close at 1,975.44. The local currency ended at 1,075 won to the dollar, up 1.7 won from Tuesday's close. Bahk, the finance minister, said that the government is considering drawing up market-stabilizing steps in case the North commits further provocations, such as a missile test. The FSC said that in the short term, market volatility could increase if the North commits another provocation in defiance of possible international sanctions. "The financial watchdog plans to closely monitor the financial markets and will act with prepared contingency plans if needed," the FSC said. The central bank held an emergency meeting to monitor financial markets earlier in the day, saying that it would craft market-stabilizing measures by cooperating with the government, if needed. Meanwhile, Standard & Poor's said that the rocket launch had "no material impact on Korea's sovereign rating." "We also view the negative economic impact on South Korea to be modest and temporary," the credit rating appraiser said in a statement.