Seoul shares close flat on key rate freeze

South Korean stocks closed almost flat on Thursday following the central bank's decision to freeze the key interest rates, analysts said. The local currency fell against the U.S. dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) rose 2.40 points, or 0.12 percent, to 2,002.13. Trading volume was low at 320.7 million shares worth 4.01 trillion won (US$3.64 billion), with gainers outnumbering decliners 489 to 324.

"Local shares traded flat as investor sentiment was dented by the central bank's decision to free the key rates for March," said Kim Sung-hwan, an analyst at Bookook Securities Co. "Foreign investors and institutions offloaded shares accordingly."

South Korea's central bank froze the key interest rate for the fifth straight month on Thursday, apparently awaiting what measures the new government will take to stimulate the slowing economy.

The Bank of Korea held the benchmark seven-day repo rate steady at 2.75 percent for March. The central bank cut the rate in July and October 2012. The rate freeze came as the global economy is showing some signs of stabilizing while geopolitical risks from North Korea have heightened.

Foreigners offloaded a net 188.7 billion won worth of local shares, and institutions sold a net 71.9 billion won. Retail investors scooped up a net 259.5 billion won.

LG Electronics, the country's No. 2 technology firm, moved up

0.62 percent to 80,500 won following the brighter outlook on its smartphone sales this year.

STX Pan Ocean, the nation's leading bulk carrier, moved up 4.5 percent to 5,110 won on reports that the state-run Korea Development Bank is considering acquiring shares in the company.

In contrast, Lotte Tour Development fell to the daily permissible limit at 14.92 percent to 8,040 won for the second trading session, due to the collapse of South Korea's largest-ever urban development project in Yongsan, located in the heart of Seoul.

Construction firms also traded lower due to the project failure, with Hyundai Engineering & Construction falling 0.78 percent to 63,800 won and GS Engineering & Construction losing 1.68 percent to 52,800 won. Samsung C&T closed flat at 64,800 won.

Market behemoth Samsung Electronics lost 0.46 percent to 1,52,000 won despite the scheduled launch of the Galaxy S4 model, which is set to be introduced in the United States on Thursday.

The local currency ended at 1109.00 won, down 11.60 won from Wednesday's close, following improved U.S. economic data, dealers said. (Yonhap News)