Seoul shares firm amid relief rally, techs gain

SEOUL: Seoul shares rose on Monday in a relief rally following positive news from Italy of economic reforms, with gains led by technology stocks such as Hynix Semiconductor Inc and LG Display Co Ltd.

"Investors are relieved by the news from Italy, and the market is recovering to levels seen earlier this month," said NH Investment & Securities analyst Kim Hyoung-ryoul. "But trade will probably be within a fairly limited range this week as there is a lack of other positive economic or corporate factors."

Foreign investors were buyers of a net 26.6 billion won ($23.6 million) worth of stocks, poised to snap three consecutive sessions of selling.

Italy's Senate approved economic reforms intended to reverse a collapse of market confidence on Friday, kicking off a rapid transition to end the Berlusconi era and clear the way for an emergency government within days.

The Korea Composite Stock Price Index (KOSPI) was up 2.1 percent at 1,902.63 as of 0225 GMT, near the psychologically significant 1,900 level.

Technology issues led gains, with Hynix Semiconductor up 5.1 percent after news late on Friday that SK Telecom Co Ltd has been named preferred bidder for control of the world's No.2 memory chip maker.

"Hynix shares are rallying on expectations of SK Telecom's investment in the company," said KB Investment & Securities analyst Byun Han-joon. "The company had not been able to invest more aggressively due to a lack of funds, but with SK Telecom as its new top shareholder it is likely to be able to."

Byun added that investment in nand flash chips was seen likely, which would lead to a visible earnings improvement next year.

LG Electronics Inc, the world's No.3 handset maker, rose 4.6 percent, and Samsung Electronics Co Ltd climbed 1.7 percent to hit 1 million won.

Firm gains in brokerages and banks gave further support, with Woori Investment & Securities Co Ltd up 3.7 percent and Shinhan Financial Group Co Ltd up 2.4 percent.

Tourism counters rallied after a Swiss foundation provisionally picked South Korea's Jeju Island as one of "seven new wonders of nature," pointing to higher tourist traffic for the island.

Hana Tour Service Inc advanced 3.9 percent and Mode Tour Netwrk Inc gained 3.7 percent.

Defensive issues underperformed as investor interest in less cyclical sectors ebbed.

Tobacco and ginseng producer KT&G Corp fell 0.8 percent, and CJ Corp, a food conglomerate was flat.

Copyright Reuters, 2011