Seoul shares end 1.36 pct up on bargain hunting

South Korean shares finished 1.36 percent higher Wednesday, making a rebound from steep losses in the previous session, as domestic institutions and retailers picked up bargains, analysts said. The local currency fell against the U.S. dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) advanced 21.29 points to 1,582.12. Trading volume was moderate at 350.97 million shares worth 6.44 trillion won (US$5.14 billion) with gainers exceeding losers 589 to 227.

"Investors reassessed their position after the sharp losses in the previous session, as the euro is recently showing a sign of stability and the outline of the U.S. financial reform bill became clear, which helped resolve uncertainties," said Kim Young-jun, an analyst at SK Securities.

"But domestic issues still pose uncertainties with North Korea-related risks. That's why the rebound of local markets was slower than other part of Asia," he added.

The KOSPI continued choppy trading during the session, dropping as much as 0.72 percent at one point.

Even though the benchmark KOSPI managed to recoup some of the losses from the previous session, analysts said that the appetite for risky assets has not made a complete comeback.

"Investor sentiment is not improving; it is just calming down from jitters," said Hwang Keum-dan, an analyst at Samsung Securities Co. "The market still remains vulnerable to the Europe crisis."

The key index hit a three-month low in the previous session, amid growing tension between South and North Korea over the responsibility of the sunken South Korean warship near their sea borders in March. This deepened concerns that geopolitical risks may stunt global demand.

Foreign investors were net sellers of local shares for an eighth session, cutting 252.1 billion won worth of Seoul stocks.

Insurance companies led the advance with the No. 1 life insurance company, Samsung Life Insurance, skyrocketing 12.24 percent to 110,000 won, helped by buying orders from foreign investors.

Top bulk-shipping line STX Pan Ocean Co. spiked 8.49 percent to 11,500 won, after its parent company STX Group said that its European unit won a 143 billion won (US$114 million) deal to build two vessels.

The local currency closed at 1,253.30 won to the greenback, down 3.30 won from Tuesday's close, as investors continued their escape to the safety of the dollar and treasuries, dealers said.

Bond prices, which move inversely to yields, closed lower. The yield on three-year Treasury notes added 0.02 percentage point to 3.61 percent, and the return on benchmark five-year government bonds rose 0.06 percentage point to 4.37 percent.