South Korean bonds gain as shares retreat; BOK eyed - News

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CNBC ON DIGG

South Korean bonds gain as shares retreat; BOK eyed

By: AFX | 10 Nov 2009 | 03:15 AM ET

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SEOUL, Nov 10 (Reuters) - South Korean government bonds rebounded on Tuesday as foreign investors intensified buying of debt futures on retreating shares, with the central bank rate decision looming near. News of a naval clash between two Koreas also helped the debt market, although the impact was fairly limited. "A slight increase in geopolitical tension usually prompts a flight to safety and this might be the case today," said Kim Dong-whan, a fixed-income analyst at HI Investment & Securities. "But the provocation is taken as a mere negotiating tactic and thus has no long-lasting effect on the debt market. Rather, investors are expecting more clear signs for future policy direction at Thursday's central bank meeting," he said. A Reuters poll showed that 13 out of 14 analysts forecast no rate change this week while one expected a 25-basis-point hike. A similar poll by an industry body showed that 88.7 percent of bond dealers surveyed predicted a rate freeze for Thursday. The 1-year treasury bond yield fell 3 basis points to a 2-month low of 3.37 percent and the benchmark 5-year bond yield slid 5 basis points to a one-week low of 4.95 percent. The December futures contract gained 17 ticks to end at 108.95, reversing earlier losses. close prev close 5-yr treasury bonds 4.95 pct 5.00 pct 3-yr treasury bonds 4.47 pct 4.49 pct 1-yr monetary stabilisation bonds 3.37 pct 3.40 pct 3-mth certificates of deposit 2.79 pct 2.79 pct Average call rate 2.10 pct 2.10 pct 6-mth *KORIBOR 3.25 pct 3.25 pct ~ not quoted * Korea interbank offered rate (Reporting by Seo Eun-kyung; Editing by Jonathan Hopfner) ((eunkyung.seo@thomsonreuters.com;+822 3704 5648; Reuters Messaging:eunkyung.seo.reuters.com@reuters.net)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com)) Keywords: MARKETS KOREA BONDS * Reuters Terminal users can see related statistics, contributions and news by double clicking on: Korea debt guide Corporate debt Korea equities Special debt Government debt Municipal debt Hanwha Securities-25 Samsung bond index-5 Korea primary market focus LATEST KOREAN FORECASTS GDP trade account inflation RELATED NEWS AND OTHER TOPICS All Korea news Interest rate news-Korea All debt news-Korea Korea summary New issues-Korea Korean won spot rate All Reuters debt news-4 (Multimedia versions of Reuters Top News are now available for: * 3000 Xtra : visit http://topnews.session.rservices.com * BridgeStation: view story .134 For more information on Top News, please visit http://topnews.reuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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