Stocks end lower over gloomy outlook on inflation

Stocks ended lower Thursday over the gloomy outlook on inflation and concerns over aggressive monetary tightening. The won fell against the dollar. The Kospi lost 4.77 points, or 0.18 percent, to close at 2,612.45.

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 2,612.45 points on Thursday, down 4.77 points, or 0.18 percent, from the previous trading day. [NEWS1]

Stocks ended lower Thursday over the gloomy outlook on inflation and concerns over aggressive monetary tightening. The won fell against the dollar.

The Kospi lost 4.77 points, or 0.18 percent, to close at 2,612.45.

Trading volume was light at 583.60 million shares worth 8.48 trillion won ($6.69 billion), with decliners outpacing gainers 422 to 395.

Institutional investors sold a net 155.8 billion won, while retail and foreign investors bought a net 95.6 billion won and 37.8 billion won worth of shares each.

The index opened higher, tracking overnight gains on Wall Street, as the U.S. Federal Reserve's minutes of the early May meeting indicated some flexibility in its rate hike plans.

But the market turned lower, after the Bank of Korea (BOK) raised the base interest rate by a quarter percentage point to 1.75 percent and Governor Rhee Chang-yong hinted at further rate hikes, citing high inflation.

"The BOK's hawkish stance has renewed concerns over aggressive monetary tightening and its possible impact on the growth momentum," Meritz Securities analyst Lee Jin-woo said.

The BOK forecast that inflation will reach 4.5 percent this year, the fastest growth since 2008, while lowering its economic growth prediction to 2.7 percent from the previous 3 percent.

In Seoul, bio and chemicals shares advanced, while tech shares ended lower.

Samsung Electronics fell 0.75 percent to 65,900 won, and SK hynix sank 4.63 percent to 103,000 won.

LG Energy Solution grew 0.94 percent to 430,500 won, and Posco Holdings rose 1.2 percent to 294,000 won.

Samsung Biologics advanced 1.08 percent to 840,000 won, and Celltrion increased 0.65 percent to 154,000 won.

The local currency ended at 1,267.0 won against the dollar, up 2.4 won from the previous session's close.

The Kosdaq fell 1.26 points, or 0.14 percent, to close at 871.43 points.

Bond prices, which move inversely to yields, closed mixed. The yield on three-year government bonds gained 2.4 basis points to 2.955 percent, and the yield on the benchmark 10-year government bond fell 0.3 basis points to 2.74 percent.

BY CHO JUNG-WOO, YONHAP [cho.jungwoo1@joongang.co.kr]