Seoul shares tumble 4.38 pct on failed U.S. auto bailout

SEOUL, Dec. 12 (Yonhap) -- South Korean shares plunged 4.38 percent Friday as investor confidence was buffeted by the collapse of a U.S. bailout plan for automakers, analysts said. The local currency fell against the U.S. dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) plunged 50.61 points to
1,103.82. Volume was heavy at 603.59 million shares worth 6.27 trillion won
(US$4.57 billion), with losers outpacing earners 580 to 291.
"The local bourse took a beating from the news that the U.S Senate killed the
rescue plan," said Kim Seung-han, an analyst at CJ Investment Securities.
Even a credit line expansion with China, announced close to the market closing,
failed to put a brake on the free falls, said Kim.
The U.S. Senate voted late Thursday to reject the US$14 billion bailout package
for three endangered automakers as political parties disagreed on auto workers'
steep wage reductions.
The Bank of Korea, meanwhile, struck a deal with China to boost the $4 billion
currency swap line to $30 billion in an effort to fight a liquidity shortage.
Shares tumbled across the board, with financial stocks being dealt the heaviest
blows following recent steep gains. Financial holding company Shinhan Financial
plummeted 14.9 percent to 29,700 won and Korea Exchange Bank nose-dived 14.43
percent to 6,700 won.
IT shares also shed substantial ground. Market bellwether Samsung Electronics
lost 3.63 percent to 465,000 won and LG Electronics plunged 6.37 percent to
79,400 won.
Steel makers extended losses for a fourth consecutive day as world demand and
steel prices remained low. POSCO, the top steel mill, fell 4.46 percent to
375,000 won.
The local currency ended at 1,372.5 won to the dollar, down 14 won from
Thursday's close, as overseas investors unloaded won to reduce exposure to the
local stock market, dealers said.
Bond prices, which move inversely to yields, closed higher. The return on
three-year Treasuries fell 0.06 percentage point to 3.95 percent and the
benchmark yield on five-year government bonds also decreased 0.09 percentage
point to 4.35 percent.