Punters look eagerly to EU summit this week

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Punters look eagerly to EU summit this week

Korean stocks will be influenced by the results coming out of the European Union’s summit meeting scheduled for late next week that could help determine the future of the euro monetary union, local analysts said.

The country’s key stock index, Kospi, closed at 1,847.39 on Friday, a drop of 0.57 percent, or 10.77 points, from the week before.

The decrease marks the first time in five weeks that the bourse lost ground on a weekly basis, and was brought on by disappointment over the U.S. Federal Reserve’s lukewarm economic bolstering program and weak data for the U.S. and Chinese economies.

Additionally, Moody’s lowering of the credit ratings of 15 banks in the U.S. and Europe, including Citigroup, Bank of America, JPMorgan, Morgan Stanley, Goldman Sachs, Deutsche Bank, Credit Swiss and BNP Paribas also sent shock waves adding to the fall on Friday.

Local market watchers said the leaders of Germany, France, Italy and Spain have already agreed to push for a growth package worth up to $163 billion that aims to stimulate growth and preserve the embattled euro zone.

They said details of how European leaders will try to tackle such issues as the banking sectors woes in Spain and fiscal problems facing Greece during the two-day summit that begins on Thursday will dictate how the market reacts.

The European Union is also reportedly trying to agree on tax reforms for financial transactions.

“Fiscal risk facing some countries and a slowdown in growth are sources of lingering concern, but the Kospi should able to stay above the 1,800 point line,” said Lee Seung-woo, an analyst at KDB Daewoo Securities.

He added that while there is a need to wait to see the results of the EU summit, overall political uncertainties have diminished, which could act to cushion the local stock market from excessive volatility.

Yonhap

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