April 12, 2017 / 2:39 AM / 7 months ago

S.Korea won checked by growing N.Korea tension, stocks rebound

    * Won could touch 1,150; deep losses unlikely -analyst
    * KOSPI rebounds on foreign demand for stocks
    * Premium for S.Korean credit default swaps highest in 9

    SEOUL, April 12 (Reuters) - The South Korean won       
wobbled early on Wednesday as growing worries over North Korea
offset weakness in the dollar, but foreign equity investors
appeared unfazed, buying local stocks.
    North Korean state media warned on Tuesday of a nuclear
attack on the United States at any sign of American aggression,
as a U.S. Navy strike group steamed toward the western Pacific.
    The won            stood at 1,144.3 to the dollar as of 0214
GMT, up slightly up from Tuesday's close of 1,145.8.
    It touched as low as 1,149.5, its weakest since March 15.  
    Ha Keon-hyeong, a foreign exchange analyst at Shinhan
Investment Corp, said the won could fall to 1,150 if Washington 
issues further warnings to Pyongyang in the short-term, but
doubted the won would weaken past that level.
    "If we rule out current geopolitical risks, the won is still
regarded stronger than the dollar in the markets due to recent
upbeat exports," said Ha.
    South Korea's exports grew more than expected in March
thanks to stronger global demand, even as souring relations with
China, its biggest trading partner, continue to pose risks to
its economy.             
    South Korean shares snapped a six-day decline as foreign
investors came back in to buy the local equities.
    The Korea Composite Stock Price Index (KOSPI)         was up
0.1 percent at 2,125.73 points.
    Offshore stock investors were set to break a seven-day
selling streak. They purchased a net 25.3 billion Korean won
($22.11 million) worth of KOSPI shares near midday. 
    Steelmaker Posco             rose 1.1 percent while Samsung
SDI             fell nearly 2 percent.   
    Decliners outnumbered advancers 440 to 322.
    June futures on three-year treasury bonds         gained
0.04 point to 109.41.
    The premium for South Korean credit default swaps (CDS) rose
to its highest level in nine months on Wednesday, as investors
viewed the country's sovereign notes as a riskier bet amid the
rising tensions between North Korea and the United States.
    The CDS premium of five-year South Korean government bonds
rose to 57.14 basis points as of 0150 GMT, the highest since
June 2016, and up from as low as 51.143 on Tuesday.             
                       0214 GMT    Prev close
 Dollar/won             1,144.3       1,145.8
 Yen/won             10.4520/42       10.4408
 *KTB futures            109.41        109.37
 KOSPI                 2,125.73      2,123.85
 * Front-month futures on three-year treasury bondsc    

 (Reporting by Dahee Kim; Editing by Kim Coghill)

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