South Korea seeks urgent action on economy, c.bank to meet

By Cheon Jong-woo

SEOUL (Reuters) - South Korea, its markets tumbling in the global financial storm, said on Sunday it needed to take urgent action to prop up the economy with some analysts saying the central bank would cut interest rates the next day.

The call, after an emergency meeting of top economic officials with President Lee Myung-bak, follows last week's sharp plunge in shares prices and the won as fears grow that Asai's fourth largest economy is buckling under the strain of the global financial turmoil.

"(We) agreed on the need to stabilize market interest rates and to provide sufficient liquidity to avoid corporate bankruptcy," senior presidential economic policy aide Bahk Byoung-won told reporters.

The meeting included the finance minister and the governor of the central bank.

Earlier, the central bank announced it would hold an unscheduled monetary policy meeting in the morning of October 27 when a number of analysts said it would cut interest rates for the second time this month, possibly by as much as 50 basis points.

It has only once made an emergency rate cut since adopting its current rate-setting system in 1999 when it reduced rates by half a percentage point shortly after the September 11, 2001 attacks in the United States.

The Bank of Korea joined a global rate cut earlier this month, reducing its main interest rate by 25 basis points to 5 percent and some analysts said Monday would see another cut.

NO CHOICE