(LEAD) Seoul stocks snap 3-day rise on uncertainty over U.S. rate cuts

(ATTN: ADDS bond yields at bottom)

SEOUL, Aug. 22 (Yonhap) -- South Korean shares closed lower Thursday, snapping their three-day consecutive rise, on uncertainty over the U.S. Federal Reserve's much-awaited rate cuts. The Korean won lost ground against the U.S. dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) lost 13.64 points, or 0.69 percent, to close at 1,951.01. Trading volume was moderate at some 427 million shares worth about 4 trillion won (US$3.3 billion), with losers outnumbering gainers 521 to 301.

The index swerved in and out of positive terrain in the morning session but extended losses in the afternoon session, despite overnight gains on Wall Street.

Coupled with stronger-than-expected retail sales, minutes from the latest U.S. Federal Open Market Committee (FOMC) meeting held last month dimmed the outlook for the Fed's sharp rate cuts in the future.

"(The minutes) showed split views of Fed board members and now the Jackson Hole meeting is attracting more attention as the economic conditions have worsened since the FOMC meeting in July," KB Securities said in a daily report.

In the July meeting, the Fed voted to cut its base rate for the first time in more than a decade, but many have since voiced a need for additional and more aggressive rate reductions.

Fed Chairman Jerome Powell is expected to offer a message on the future direction of U.S. monetary policy at the annual Jackson Hole seminar, slated to be held Thursday through Saturday (U.S. time).

"The world is waiting to hear the Jackson Hole speech. Whether there will be one or two rate cuts before the year's end is not important. What is needed is a way to overcome challenges facing monetary policies. A new 'whatever it takes' approach is urgently needed," said Kim Yoon-seo, a senior researcher at Shinhan Investment.

Foreign investors remained net sellers for a second consecutive session, dumping a net 122.5 billion won, while individuals scooped up a net 162 billion won. Institutions sold a net 51.6 billion won.

Most large caps closed in negative terrain.

Market bellwether Samsung Electronics lost 1.01 percent to 44,050 won, while No. 2 chipmaker SK hynix plunged 2.64 percent to 73,800 won.

Top automaker Hyundai Motor tumbled 1.2 percent to 124,000 won, with its smaller affiliate Kia Motors falling 1.76 percent to 41,950 won.

The Korean won closed at 1,207.50 per dollar, down 5 won from the previous session's close.

Bond prices, which move inversely to yields, closed higher. The yield on three-year Treasurys shed 2.6 basis points to 1.130 percent, while the return on the benchmark five-year government bond lost 3.9 basis points to 1.183 percent.

bdk@yna.co.kr
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