KOREA MARKETS-Shares, bonds steady; won down over Korea tensions

* Won weakens on N.Korea tensions as dollar firm

* Sentiment cautious over peninsula tensions

* Banking stocks actively traded ahead of Hana-KEB deal

(Updates after market opens)

By Kim Yeonhee and Cheon Jong-woo

SEOUL, Nov 25 (BestGrowthStock) – South Korean shares and bonds
held steady on Thursday but investor sentiment remained
cautious after North Korea’s artillery attack earlier this
week raised tensions on the divided Korean peninsula.

The won fell about half a percent against the
dollar, while the main Seoul stock index was off just
0.20 percent as foreign investors unloaded a net 155
billion won worth of shares.

North Korea rained artillery shells on Tuesday on the
island of Yeonpyeong, south of the disputed maritime boundary
with the South. Two soldiers and two civilians were killed, the
first time civilians have died in an attack by the North since
1987.

“Yesterday’s market reaction to the North Korea-related
event was different from the past ones and was unexpected,”
said Seo Jung-ho, a director at UBS Hana Asset Management’s
stock management division, who had expected the stock market
to fall much more sharply in reaction to the shelling.

At Wednesday’s close the KOSPI was 2.6 percent below a
3-year-high reached on Nov. 11. It fell 0.2 percent on
Wednesday and 0.8 percent on Tuesday.

Tensions remained high on the peninsula as a U.S. aircraft
carrier group set off for Korean waters. South Korea President
Lee Myung-bak called an emergency meeting on Thursday to
contain the economic impact of the attack.
[ID:nL3E6MO04H][ID:nTOE6AN091]

The United States said it believed North Korea’s attack
was an isolated act tied to leadership changes in Pyongyang.
It called on China to use its influence to stop the North’s
provocative behaviour.

American depository shares of South Korean companies
rallied on Wednesday, more than recovering the previous
session’s 4 percent drop, as long-term investors used the
initial selloff as an opportunity to snap up bargains.

December-delivery treasury futures were flat on Thursday
after a weak start, although foreign investors dumped a net
1,978 contracts.

The won fell to 1,147.5 per dollar. It is already the
worst-performing Asian currency this year against the dollar
among those monitored daily by Reuters.

Banking stocks bucked the broader steady trend on
expectations for mergers and acquisitions in the sector.

Hana Financial Group , South Korea’s No. 4
financial services company, is set to buy a majority stake in
smaller rival Korea Exchange Bank for up to 4.75
trillion won ($4.1 billion). [ID:nTOE6AN03D]

A sub index of major financial stocks rose more than 1
percent. Among the movers, third-ranked Woori Finance Corp
rose 5.1 percent, while Hana fell 2.1
percent.
($1=1146.9 Won)

(Editing by Neil Fullick)

KOREA MARKETS-Shares, bonds steady; won down over Korea tensions