Rate Hope Dims; Seoul Marts Fall

Share prices on Seoul's main exchange lost ground Friday, plunging to a two-month low on heavy foreign selling in futures amid what analysts said were dashed hopes of an early U.S. interest rate cut.

The Korea Composite Stock Price Index sank 18.66 points, or 3.22 percent, to 559.44, off a high of 574.61 and a low of 557.20.

Trading volume shrank to 329.7 million shares valued at 1.9 trillion won ($1.5 billion).

Declining issues overwhelmed gainers 701 to 142, and 21 other stocks ended unchanged. Twenty-one stocks fell by their daily limit of 15 percent, while 19 stocks rose by that limit.

Investor sentiment cooled down rapidly after U.S. Federal Reserve Chairman Alan Greenspan suggested that, despite the slowing U.S. economy, the Fed was not likely to trim interest rates before its meeting on March 20.

Mr. Greenspan's remark triggered a heavy sell-off in the futures market, where foreign investors dumped 5,981 contracts, the largest daily sale in nearly 20 months.

"The domestic stock market is vulnerable to external factors, as the U.S. economy is on the decline and Japan's stock prices and currency are becoming weaker," said Lim Song-hak, an investment strategist at Kyobo Securities Co.

Share prices of brokerage firms took a beating as disappointed investors dumped the stocks. LG Investment & Securities Co. was off 12.62 percent to close at 9,000 won, and Good Morning Securities Co. shed 9.44 percent to 5,180 won.

Key large-cap issues were also in negative territory, leading the day's losses. Samsung Electronics Co. was down 3.48 percent at 180,500 won, and SK Telecom Co. dropped 1.88 percent to 208,500 won.

In contrast, some "old economy" shares closed higher on foreign buying. Pohang Iron & Steel Co. was up 0.99 percent at 102,000 won, and Hyundai Motor Co. added 2.50 percent to 16,400 won.

The Kosdaq composite index dropped 4.77 points, or 6.21 percent, to 71.99, the lowest since Jan. 12. KT Freetel shed 2.45 percent to 37,850 won, and Serome Technology fell 11.74 percent to 18,050 won.

by Kim Hyun-chul