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S.Korea stocks down more than 1% as U.S.-China trade war escalates

* KOSPI index hits lowest since Feb, 2016 * Korean won turns higher vs U.S. dollar * South Korea benchmark bond yield rises By Hayoung Choi SEOUL, Aug 6 (Reuters) – South Korean shares fell more than 1% on Tuesday, marking the fifth consecutive session of losses, after Washington designated Beijing a currency manipulator in a further escalation of their trade conflict. U.S. Treasury Secretary Steven Mnuchin said on Monday the government had determined that China was manipulating its currency, and that Washington would engage the International Monetary Fund to eliminate unfair competition from Beijing. As of 0205 GMT, the Seoul stock market’s main KOSPI had dropped 24.23 points, or 1.24%, to 1,922.75 points. The index fell as much as 2.8% in early trade, hitting the lowest level since February 2016. “Uncertainties have grown as the friction between the United States and China reached a boiling point,” said Noh Dong-kil, an analyst at NH Investment & Securities. Most leading KOSPI firms were in red, including SK Hynix and Hyundai Mobis , which dropped 3% and 4%, respectively. South Korea’s finance ministry said on Tuesday it is monitoring markets closely and would act quickly if volatility became excessive, while the central bank also held a meeting to assess the market situation. Japan’s decision on Friday to remove South Korea from fast-track export status put further strain on the trade-reliant economy, sending the benchmark index plunging. The junior KOSDAQ stumbled as much as 5.1% on Tuesday before giving up early losses. The Korean won turned higher with currency dealers suspecting authorities had sold dollars to curb the currency’s weakness. The won was quoted at 1,213.1 per dollar on the onshore settlement platform , 0.18% higher than its previous close at 1,215.3. On the main board, foreigners were net sellers of 221.2 billion won ($182.30 million) worth of shares. The KOSPI has fallen 5.80% so far this year, and has lost 8.4% in the previous 30 trading sessions. The won has lost 8.0% against the U.S dollar so far this year, making it the biggest percentage loser among its major Asian peers. In money and debt markets, September futures on three-year treasury bonds fell 0.03 points to 111.23, while the 3-month certificate of deposit rate was quoted at 1.50%. The most liquid 3-year Korean treasury bond yield rose by 1.8 basis points to 1.190%, while the benchmark 10-year yield rose by 2.6 basis points to 1.278%. ($1=1,213.4 won) (Reporting by Hayoung Choi)

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