South Korea bonds rise on easing inflation outlook

(Updates to close)

SEOUL, July 24 (Reuters) - South Korean government bond
prices rose on Thursday, with the benchmark five-year treasury
yield hitting a four-week closing low, as falling oil prices and
the rising won lowered the inflation prospects.

The yield on the five-year treasury bonds <KR5YT=KSDA> ended
down 3 basis points at 5.87 percent, the lowest since finishing
at 5.85 percent on June 27, while September treasury bond futures
KTBc1 added 12 ticks to 105.60.

"The strengthening won as the oil price keeps falling did a
lot of help to ease concerns about inflation continuing to
accelerate for a long period," said Shin Dong-su, a fixed-income
analyst at NH Investment and Securities.

The won <KRW=> rose 0.7 percent against the dollar to
1,006.75 per dollar from Wednesday's domestic close of 1,013.8,
while oil prices fell to a six-week low overnight.

But analysts said the bond market could face profit-taking
sales after sharp gains in bond prices for three successive
sessions, over which period the five-year yield has fallen a
combined 25 basis points.

close prev close
5-yr treasury bonds KSDA02 5.87 pct 5.90 pct
3-yr treasury bonds 5.81 pct 5.84 pct
1-yr monetary stabilisation bonds 5.86 pct 5.88 pct
3-mth certificates of deposit 5.63 pct 5.59 pct
Average call rate <1SYR=KMBC> 4.99 pct 4.55 pct
6-mth *KORIBOR <KIKRW=> 5.92 pct 5.92 pct
* Korea interbank offered rate
(Reporting by Yoo Choonsik; Editing by Keiron Henderson)