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Seoul shares to rebound on European crisis deal

South Korean shares are expected to rebound this week, as European leaders agreed last week on a series of fiscal measures to stem the ongoing debt crisis, analysts said Saturday.

At their two-day summit that ended Friday, European leaders agreed to tighten anti-deficit rules and funnel money to the International Monetary Fund, thus preventing future debt run-ups.

“The outcomes were roughly in line with market expectations,” said Kang Hyun-chul, an analyst at Woori Investment & Securities. “Now, investors will be focused on China’s measures to boost domestic demand.”

The benchmark KOSPI dropped 2.15 percent last week to close at 1,874.75 on Friday, sinking below the 1,900 point level for the first time since it finished at 1,847.51 on Nov. 30.

Market sentiment was dampened the European Central Bank failed to meet market expectations that it would step up to buy bad debts. Also, market players remained concerned about whether European Union leaders would take bold action to avoid a worst-case scenario at their summit meeting.

“The market will respond positively to the summit’s results, and cautiously take a turn upward,” said Oh Sung-jin, an analyst at Hyundai Securities.

U.S. stocks rallied on Friday welcoming the agreements by the European leaders.

The Dow Jones industrial average jumped 186.56 points, or 1.55 percent, to end at 12,184.26, and the technology-heavy Nasdaq Composite Index soared 50.47 points, or 1.94 percent, to 2,646.85.
 
(Yonhap News)
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