Seoul shares drop three percent

Seoul shares fell on Thursday as the Federal Reserve's warning that the United States faced a gloomy economic outlook spooked investors and data from China offered more evidence of a slowdown. The main KOSPI index will likely trade around the low-1,800 point level until key decisions expected in Europe next week, analysts said. The Korea Composite Stock Price Index finished down 2.9 percent at 1,800.55 points.
"The outcome of the US Fed meeting was disappointing and weakness in Chinese manufacturing data added to already mounting negative sentiment," said Bae Sung-young, a market analyst at Hyundai Securities. The Federal Reserve on Wednesday warned of significant risks to the already weak US economy and launched a new plan to lower long-term borrowing costs and bolster the battered housing market. China's manufacturing sector contracted for a third consecutive month in September while a measure of inflation picked up.
Foreign investors were sellers of a net 305.7 billion won ($265.9 million) worth of stocks, switching from buying in the previous session. Major large-cap stocks were slammed in the selloff, with shares in POSCO, the third-largest issue on the KOSPI, sinking 4.3 percent. Banks also lost ground, with KB Financial Group down 5.6 percent and Hana Financial Group down 5.1 percent.