Stocks close lower Thursday as investors brace for more U.S. rate hikes

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 2,401.83 points on Thursday, down 9.59 points, or 0.40 percent, from the previous trading day. [YONHAP]

Korean stocks closed lower Thursday, paring earlier mild gains, as investors brace for more rounds of rate hikes by the Federal Reserve after strong U.S. inflation data.

After starting a tad higher, the benchmark Kospi slipped 9.59 points, or 0.4 percent, to 2,401.83. Trading volume was moderate at 417.7 million shares worth 7.3 trillion won ($5.23 billion) with decliners outnumbering gainers 437 to 407.

"If we were to look at the inflation issue in two phases, the first phase of peaking appears to have taken place with the June [consumer price index]," Han Ji-young, an analyst at Kiwoom Securities, said.

"The point to watch going forward is when the inflation will cool off to a meaningful level — the four percent range — and we know from the August CPI and (producer prices index) that we need more time for that to happen," Han said.

Foreigners sold off a net 223.6 billion won worth of stocks and institutions a net 144.4 billion won. Individuals snapped up a net 349.7 billion won.

Wall Street managed to end higher Wednesday (local time) as investors took a pause following the market jolt over the U.S. August inflation print. The U.S. PPI slowed for the second month in a row in August, an indication that inflation is easing.

In Seoul, the bio and IT sectors were among the biggest decliners. Samsung Biologics dipped 2.54 percent to 807,000 won, and Celltrion lost 0.56 percent to 179,000 won.

Samsung Electronics sank 1.41 percent to 56,000 won.

Battery makers finished bullish. LG Energy Solution climbed 2.51 percent to 511,000 won, and Samsung SDI added 0.16 percent to 615,000 won.

The local currency ended at 1,393.70 won against the dollar, up 2.8 won from Wednesday's close.

The Kosdaq lost 1.55 points, or 0.20 percent, to close at 781.38 points.

Bond prices, which move inversely to yields, closed lower. The yield on three-year government bonds gained 18.2 basis points to 3.775 percent, and the yield on the 10-year government bond advanced 13.3 basis points to 3.791 percent.

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