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EU summit likely to affect S. Korea's stock market direction next week

South Korean stocks stand to be affected by the outcome of next week's summit talks among European leaders as the fiscal debt crises in Greece and other eurozone countries still weigh on the overall market sentiment here, analysts said Saturday.

The benchmark Korea Composite Stock Price Index (KOSPI) closed at 1,838.38 on Friday, up 2.98 points or 0.16 percent from a week earlier.

The index suffered ups and downs throughout the week on worries over the Greek debt problems. But it managed to close above the 1,830 mark on the news that the Greek parliament passed austerity measures, a necessary step to receive outside rescue help.

As eurozone finance ministers have decided to provide help to Greece, anxiety over its possible default and impact on the world could be eased, possibly giving yet another boost to market sentiment.

But investors will likely stay more focused on what decisions are made during the summit talks among European Union leaders on Sunday to see if whether they have a strong will to tackle the current challenges, analysts said.

During the talks, the leaders are likely to discuss detailed plans to help Greece and strengthen the European Financial Stability Facility, the EU's bailout fund, among other things. They are also scheduled to have another round of talks on Wednesday.

"The market direction next week will be determined by investors' response to the outcome of the EU summit talks," said Lee Seung-woo, an analyst at Daewoo Securities.

He added that the recent upward trend is attributed in part to expectations about the EU summit talks, but the expectations could be easily replaced by disappointment if the leaders fail to come up with concrete measures.

(Yonhap News)