Seoul shares fall after Fed meeting; shipbuilders struggle

Reuters

* KOSPI weaker in line with regional markets

* Samsung SDI declines after Tesla, Panasonic strengthenties

* Struggling Hanjinkal drags down Korean Air

SEOUL, Oct 31 (Reuters) - Seoul shares eased off a 27-monthclosing high early on Thursday, as sentiment chilled after theU.S. Federal Reserve's latest policy outlook and investorsawaited key surveys later this week.

The Korea Composite Stock Price Index (KOSPI) slipped 0.6 percent to 2,046.63 points by 0205 GMT after hitting2,059.58 in the previous session, a 27-month closing high.

"Extended liquidity raised questions about the condition ofthe world's largest economy...investors are locking in gainsbefore a slew of data reinforces a slowdown in recovery," saidHanyang Securities analyst Lim Dong-rak, referring to expectedsoft U.S. data from the effects of a 16-day partial governmentshutdown.

"Investors acknowledge more liquidity without firmingeconomic fundamentals will take the market no where."

The U.S. central bank kept its $85 billion-a-month stimulusplan intact but did not sound quite as alarmed about the stateof the economy as some had anticipated, dragging down WallStreet from its recent rally.

Investors are cautiously awaiting global indicators such asU.S. and China manufacturing surveys for October, both due onFriday. South Korea's October manufacturing sector surveyalongside preliminary export growth and trade balance data arealso due on the same day.

Foreign investors added pressure on the market by offloading90.4 billion won ($85.26 million) of local shares in themorning, enhancing chances their record net buying streak willend at 44 sessions.

However, the flow of foreign capital has fluctuated, leavingroom for inflows by session end.

Shipbuilders Hyundai Heavy Industries Co Ltd andDaewoo Shipbuilding & Marine Engineering Co Ltd fell3.1 percent and 5.9 percent, respectively, with the sub-index soaring 28.7 percent since July.

Samsung SDI Co Ltd fell 3.7 percent afterelectric automaker Tesla Motors Inc said it wouldsharply increase the number of lithium ion cells it receivesfrom Panasonic Corp, Samsung SDI's oversea competitor.

Korean Air Line Co Ltd plunged 9.1 percent afterdeciding to provide a loan of 150 billion won for its strugglingaffiliate Hanjinkal, raising risks over itsfinancial structure. Hanjinkal fell 7.9 percent.

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