Korean stocks down sharply on concerns over strife in Middle East

Stocks decreased sharply Monday as investor sentiment was dampened by rising concerns over the developing military tension in the Middle East. The local currency lost ground against the U.S. greenback.

Screens in Hana Bank's trading room in central Seoul show the Kospi closing at 2,436.24 points on Monday, down 0.81 percent, or 19.91 points, from the previous trading session. [NEWS1]

Stocks decreased sharply Monday as investor sentiment was dampened by rising concerns over the developing military tension in the Middle East. The local currency lost ground against the U.S. greenback.

The Kospi shed 19.91 points, or 0.81 percent, to close at 2,436.24, extending its losing streak to two straight sessions.

The Kosdaq fell 12.24 points, or 1.49 percent, to close at 810.54.

Trading volume was heavy at 776.2 million shares worth 8.29 trillion won ($6.12 billion), with losers far outnumbering gainers 644 to 248.

Foreigners dumped a net 207 billion won worth of local shares, offsetting a net purchase of 198.5 billion won by institutions.

"The sharp decline is affected by offshore investors' appetite for safe assets amid rising geopolitical concerns in the Middle East," Seo Sang-young, an analyst from Mirae Asset Securities, said. "Also, a drop in U.S. tech shares last Friday also weighed heavily on Korean stocks."

Latest news reports that Israel is preparing for a ground offensive into the Hamas-controlled Gaza Strip have escalated concerns over a wider regional conflict.

Most shares closed in negative territory across the board.

Samsung Electronics tumbled 1.03 percent to 67,300 won, and SK hynix retreated 0.48 percent to 124,100 won.

Chemicals and battery shares were also among the big losers, with LG Chem sinking 2.84 percent to 513,000 won and LG Energy Solution slumping 2.07 percent to 474,000 won.

The tourism sector was hit hard by the possible new war in the Middle East. Korean Air Lines fell 1.84 percent to 19,780 won, and Asiana Airlines declined 0.3 percent to 10,000 won.

Hotel Shilla slipped 2.22 percent to 70,400 won, and Hanatour Service stayed flat at 42,000 won.

Oil stocks showed a rise.

Korea Petroleum jumped 9.9 percent to 16,540 won, and Kukdong Oil and Chemicals 8.49 percent to 4,600 won.

The local currency ended at 1,353.7 won against the U.S. dollar, up 3.7 won from the previous session's close.

Bond prices, which move inversely to yields, closed mixed. The yield on three-year government bonds rose 0.9 basis points to 3.96 percent, and the return on the benchmark U.S. 10-year government bonds fell 7.5 basis points to 4.62 percent.

BY KIM JI-YE,YONHAP [kim.jiye@joongang.co.kr]