Seoul shares push higher even as foreign selling continues

SEOUL: South Korean stocks rallied on Wedneday, recovering from heavy losses, although foreign investors continued to sell shares ahead of an options expiry as Seoul once again underperformed other Asian markets.

Korean regulators banned short-selling from Wednesday for three months and asked financial firms to be more flexible on stop-loss trades.

"Even though short selling is not allowed, there are lots of ways to offload stocks, finding short positions on derivatives," said Choi Un-sun, a strategist at LIG Investment & Securities.

The Korea Composite Stock Price Index (KOSPI) climbed 1.87 percent to 1,835.05 points as of 0140 GMT, managing to recover a portion of the steep slide after it ended at its lowest level since September 2010 on Tuesday.

Markets across Asia rallied, bolstered by gains on Wall Street after the US Federal Reserve said it would keep interest rates near to zero until mid 2013.

Analysts said, however, heavy selling from programme accounts and foreign investors a day ahead of option expiries were limiting gains here.

Foreigners sold a net 941.2 billion won ($864.9 million ), set to continue their selling spree for seven days in a row.

The Korean stock market is heavily skewed by foreigners' move, as their proportion of stockholding accounts more than 30 percent.

South Korean stock index futures traded higher after recent steep losses.

By 0 232 GMT, KOSPI 200 Sept futures were up 1 .1 percent, after opening more than 4 percent higher.

Top advancers included key exporters including shipbuilders such as the world's No.1 Hyundai Heavy Industries jumping 6.1 percent.

Samsung Electronics , the world's No.1 memory chip maker and the largest stock on the KOSPI, gained 0.5 percent, underperforming the market, after Apple Inc succeeded in blocking Samsung's Galaxy Tab sales in the European Union except the Netherlands.

As foreigners continued to reduce stocks, South Korean stocks lagging behind the MSCI Asia ex-Japan index , which rose 2.6 percent as of 0213 GMT.

Copyright Reuters, 2011