South Korea stocks face worst day in three weeks, won extends gains

SEOUL (Reuters) - Seoul shares slid on Friday morning and headed for their worst day in three weeks after a sharp decline in Wall Street turned investors away from risk, but solid March Chinese inflation data helped pare some of the initial losses.

The Korea Composite Stock Price Index (KOSPI) was down 0.7 per cent at 1,993.71 points as of 10.10am Singapore time after touching an intraday low of 1,985.16. The index is headed for its biggest one day drop since a 0.9 per cent slide on March 20.

"The risk-off sentiment stemming from New York has spilled over to Seoul, prompting profit-taking as investors caught their breath," said Hyundai Securities analyst Bae Sung-young, "the upcoming first quarter corporate earnings results will decide the extent of the market's rebound in the near term."

Shares in Wall Street plunged on Thursday, with the Nasdaq Composite suffering its biggest drop in 2-1/2 years after another sharp selloff in biotech and momentum names.

Decliners outnumbered advancers 538 to 230 in South Korea's main index, with several technology-related names among bottom performers in the morning session.

South Korea's largest search portal operator Naver Corp dropped 3 per cent and online game developer NCsoft Corp fell 4.5 per cent. IT service provider SK C&C Co Ltd slipped 1 per cent.

Offshore investors sold a net 30.5 billion won (S$36.6 million) worth of KOSPI shares near mid-session, but gradually trimmed the amount after China's March consumer inflation index came out at 9.30am Singapore time.

China's consumer prices rose 2.4 per cent in March from a year earlier, official data from the National Bureau of Statistics showed on Friday, roughly in line with a Reuters poll expecting 2.5 per cent.

Foreigners had net-purchased KOSPI stocks for 12 straight days by Thursday, driving the main index higher with their buying total of a net 2.8 trillion won during the period.

In the foreign exchange market, the won continued to appreciate on robust demand from exporters for settlements.

The local currency was quoted at 1,038.3 against the dollar as of 10.10am Singapore time, up 0.2 per cent from Thursday's onshore close at 1,040.2.

The won has appreciated more than 2.4 per cent so far this month and nearly 1.5 per cent this week, hitting its strongest level since Aug 12, 2008 on Thursday.

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