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S. Korean shares gain on Greece optimism

(Xinhua)

15:50, March 09, 2012

SEOUL, March 9 (Xinhua) -- South Korean shares closed bullish for two straight days on Friday as optimism spread that Greece will shun a disorderly default, analysts said.

The benchmark Korea Composite Stock Price Index (KOSPI) gained 17.54 points, or 0.88 percent, to close at 2,018.30. Trading volume stood at 407.41 million shares worth 5.3 trillion won (4.74 billion U.S. dollars).

The KOSPI started higher on Wall Street's bullish close overnight, but trimmed its earlier gains in the morning session as foreign investors kept their selling streak for the fifth consecutive session. The key index extended its gains later after foreigners turned to net buyers, but the gains were limited as investors took to the sidelines ahead of the weekend.

Optimism over Greece boosted market sentiment. According to Greek government officials, nearly 95 percent of private creditors have agreed to participate in the bond swap deal, surpassing 90 percent the European nation had been aiming for.

"The U.S. and European shares finished higher overnight on news that the participation rate of the debt swap deal between the Greek government and private creditors exceeded 90 percent. That news led the KOSPI to close higher," Lee Jae-man, an analyst at Dongyang Securities in Seoul, told Xinhua.

Lee noted that the Greek debt crisis will not emerge in the near term as the country will receive the second round of bailout funds from international organizations, saying that the market sentiment was also lifted by hopes for the third round of quantitative easing by the U.S. Federal Reserve.

Arbitrage trading boosted the KOSPI's rise. Net long arbitrage position, or buying spots and selling futures, amounted to 75.91 billion won although non-arbitrage trading posted net selling of 132.9 billion won. Offshore investors also shore up the KOSPI after shifting to net buyers in five sessions. Foreigners bought a net 25.1 billion won worth of local shares.

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