Worries over world economy cause stocks to retreat

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 2,658.99 points on Thursday, down 26.91 points, or 1.00 percent, from the previous trading day. [NEWS1]

Stocks retreated Thursday, snapping a three-day gaining streak, as worries about the world economy possibly going into a recession continued to weigh on investor sentiment. The local currency fell sharply against the dollar.

The Kospi fell 26.91 points to close at 2,658.99. Trading volume was light at 513.1 million shares worth 7.6 trillion won ($6.06 billion), with decliners outnumbering gainers 520 to 322.

Institutional investors unloaded a net 748.8 billion won worth of local equities, with foreigners also selling off a net 91.4 billion won. Individual investors bought a net 793.7 billion won.

"Inflation is still at the center of the market angst, and at issue is whether in the process of dealing with inflation we will see the economy go into a recession," Han Ji-young, an analyst at Kiwoom Securities, said.

Overnight, Wall Street ended lower amid woes over the potential economic impact of the U.S. Federal Reserve's planned tighter monetary policy.

Adding to the jitters were the remarks by Jamie Dimon, chief executive of J.P. Morgan, describing the current economic challenge as a "hurricane" down the road and urging the Fed to take measures to prevent the economy from falling into a recession.

In Seoul, stocks closed the session lower, led by shipping and construction firms.

HMM slumped 4.93 percent to 30,850 won. CJ Logistics also sank 3.09 percent to 125,500 won.

Hyundai Engineering & Construction dipped 3.12 percent to 41,950 won.

Samsung Electronics fell 1.04 percent to 66,700 won, with SK hynix losing 0.93 percent to 107,000 won.

Among the gainers were internet portal operator Naver that rose 0.69 percent to 290,000 won and Posco Chemical closing up 3.45 percent to 135,000 won.

The local currency ended at 1,252.10 won against the dollar, up 14.90 won from Tuesday's close.

The Kosdaq dropped 2.22 points, or 0.25 percent, to close at 891.14 points.

Bond prices, which move inversely to yields, closed lower. The yield on three-year government bonds gained 10.3 basis points to 3.127 percent, and the yield on the benchmark 10-year government bond gained 6.1 basis points to 2.91 percent.

BY CHO JUNG-WOO, YONHAP [cho.jungwoo1@joongang.co.kr]