SEOUL: Seoul shares slipped on Thursday as investors took defensive positions ahead of a crucial summit of European Union leaders, with losses in bank and technology issues and institutional selling weighing on the benchmark index.
"Investors are moving cautiously before important events scheduled in Europe next week. The market is cautiously optimistic, but uncertainty overshadows the market," said Bae Sung-young, a market analyst at Hyundai Securities.
Investors fretted over whether European leaders would agree on a plan to tackle the euro zone's debt crisis at what has been described as a make-or-break summit on Friday, while eyes are also on an expected European Central Bank (ECB) rate cut on Thursday.
Institutions were sellers of a net 42.7 billion Korean won ($37.92 million) worth of stocks, snapping 10 consecutive sessions of buying, and retail investors offloaded a net 31.8 billion won.
The Bank of Korea held its key rate steady at 3.25 percent for the sixth successive month on Thursday amid signs that exports in one of Asia's most trade dependent economies are slowing and as domestic demand cools.
"The rate freeze reinforces the view that the South Korean economy is slowing. Along with that, euro zone jitters are having a negative impact on the stock market," said Kim Hak-kyun, an analyst at Daewoo Securities.
The Korea Composite Stock Price Index (KOSPI) ended down 0.37 percent at 1,912.39 points.
Samsung Electronics shares ended up 0.8 percent after hitting a historical high of 1,083,000 won.
"The overall tech industry outlook is not very strong through the first half of next year due to global macroeconomic uncertainty," said Park Hyun, an analyst at Tong Yang Securities.
"The psychology behind Samsung shares' strength is that, it's practically the only tech share that's worth buying. It's still managing to see good earnings despite the challenges," Park said, adding that focus will be on whether the shares can sustain the current level.
LG Display tumbled 5.1 percent on renewed market rumours of a new share issue, which the flat-screen maker denied.
Declines in bank shares added further pressure as KB Financial Group fell 1.2 percent and Shinhan Financial Group shed 2.6 percent.
While telecom shares, viewed as defensive stocks, gained ground, shares in KT Corp, South Korea's second-biggest mobile carrier, bucked the trend, declining 2.6 percent on the delay of its faster Long-Term Evolution (LTE) services.
A South Korean court on Wednesday suspended the carrier's plan to stop its second-generation mobile services and start fourth-generation LTE services from Thursday, media reports said.
KT said on Thursday that it would appeal the court decision.
Defensive issues outperformed, with KT&G ending up 3.3 percent and Hitejinro, a beer brewer and spirits manufacturer, advanced 2.5 percent.
The KOSPI 200 index fell 0.5 percent, while the junior Kosdaq index gained 0.6 percent.
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