* KOSPI down but fundamental strength in economy offsets
* Won erases earlier gains on Pence, N.Korea
SEOUL, April 18 South Korean shares were weaker
early on Tuesday, reversing earlier gains, as offshore investors
offloaded stocks for a fourth consecutive session and political
tensions over North Korea rattled investor sentiment.
The Korea Composite Stock Price Index (KOSPI) was
down 0.1 percent at 2,143.10 points as of 0252 GMT, paring a
rally earlier in the session in which it briefly touched its
highest level since April 7.
Offshore investors sold a net 21.1 billion Korean won
($18.55 million) worth of KOSPI shares near mid-session,
although this was less than Monday's 111.7 billion won.
Decliners outnumbered advancers by 426 to 343.
Kim Ye-eun, a stock analyst at Cape Investment & Securities,
said the KOSPI won't fluctuate drastically over tensions between
the United States and North Korea as investors now largely see
the South Korean economy as fundamentally sound enough to
withstand such geopolitical risks.
The upcoming May 9 presidential election at home is also
providing stocks with support, said Rhoo Yong-seok, a stock
analyst at KB Securities.
"The investors seem to be focusing more on the candidates'
major policies and how they are going to boost the economy
rather than North Korea issues," said Rhoo.
Kim added foreign investors remain reluctant to turn net
stock buyers in coming weeks as other risks remain, such as
France's presidential election, and possible changes to the
existing free trade agreement between South Korea and the United
U.S. Vice President Mike Pence told business leaders in
Seoul on Tuesday that the Trump administration will review and
reform the five-year-old free trade agreement between the two
The South Korean won was flat with the local currency
standing at 1,137.8 against the dollar, little
changed from Monday's close of 1,137.7. It had been higher
against the dollar shortly after opening, but gains were erased
by midday after Pence's comments and by North Korea-related
"It is too early to say if anxieties about the North have
cleared up, and traders need to take a neutral stance on this
issue," said a bank dealer in Seoul who declined to be named.
Meanwhile, June futures on three-year treasury bonds
lost 0.01 point to 109.44.
0252 GMT Prev close
Dollar/won 1,137.8 1,137.7
Yen/won 10.4339/23 10.3930
*KTB futures 109.44 109.45
KOSPI 2,143.10 2,145.76
* Front-month futures on three-year treasury bonds
(Reporting by Dahee Kim; Additional reporting by Kyoungho Lee;
Editing by Sam Holmes)