SEOUL: Seoul shares traded lower on Thursday as offshore investors turned net sellers, with global markets on pause from their bullish run after yet another delay to Greece's rescue deal re-renewed concern over Europe's lingering debt crisis.
"Foreign investors became net sellers following losses on Wall Street and falling NASDAQ futures, with few signs of encouragement from economic fundamentals. The local currency is also showing resilience against downside pressure, lessening the appeal of local stocks," said Hyundai Securities analyst Ham Sung-sik.
Greece expressed hope that it could secure its second EU/IMF bailout and a deal to ease its debt burden next week, but mistrust is running high, with European Union sources saying rescue funds could be withheld until after the Greek parliamentary elections in April.
The Korea Composite Stock Price Index (KOSPI) was down 1.13 percent at 2,001.73 points as of 0309 GMT.
Offshore investors had dumped a net 63.6 billion won ($56.7 million) worth of shares by mid-session on Thursday, poised to snap an eight-session buying streak, while institutions added further weight by selling a net 128.5 billion won.
Early losers were led by banks and brokerages, after Moody's Investor Service warned on Thursday that it could downgrade the credit ratings of 17 global banks and securities firms because of more fragile funding conditions, increased regulatory burdens, and a more difficult operating environment.
KB Financial Group Inc fell by the heaviest margin among banking sector peers, stumbling 3.87 percent, while brokerage Woori Investment & Securities Co Ltd fell 3.55 percent.
Growth-related stocks also lagged, with Hyundai Heavy Industries Co Ltd, the world's largest shipbuilder, dropping 3.75 percent and POSCO, the world's No.3 steelmaker, down 2.64 percent.
Hyundai Merchant Marine Co Ltd fell 1.1 percent after saying it would sell 10.59 million shares in Hyundai Securities Co Ltd on Feb. 14 next year to boost liquidity.
Drugmaker Celltrion Inc bucked the trend to post a gain of 3.23 percent after announcing a 70.5 percent expansion in 2011 profit, with analysts pointing to the company's biosimilar products as the lynchpin of its success.
Despite the KOSPI's decline, analysts said Greek woes would be a temporary roadblock in the ongoing rally, with the banking system still flush with liquidity amid signs of improving fundamentals.
"Ample liquidity will allow the market to shore up the gap between its current level and the 2,050-point threshold, and positive signs in leading US indicator readings should provide the extra momentum needed to breach 2,100," said Ham.
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