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Korean Stocks Decline on Investor’s ‘Erroneous’ Order, N. Korea

South Korea’s stocks fell, with losses triggered by what exchange officials said was possibly an “erroneous” trading order and concern North Korea’s leadership transition may heighten tensions on the peninsula.

The benchmark Kospi stock gauge dropped 0.8 percent to 1,842.02 at the close in Seoul, paring losses from a 2.3 percent plunge earlier. LG Electronics Inc. and Samsung Electro-Mechanics Co. paced declines, sliding more than 2 percent. The Korean won slumped to a one-week low against the dollar.

“An investor, which we can’t verify yet, appears to have placed an erroneous order,” La Sung Chae, an official at the market trading analysis team at Korea Exchange Inc., said by phone today. “That, combined with unconfirmed rumors about the health of the new leader of North Korea and that China may send troops to the communist nation, drove the index sharply lower. I think it seems a one-time occurrence.”

South Korean equities have fallen 10 percent this year on concern slowing global economic growth and Europe’s debt crisis will curb exports. A central bank report today showed consumer confidence slumping to a three-month low this month.

The Kospi slid 3.4 percent on Dec. 19 when the death of North Korean leader Kim Jong Il was announced, dragging the gauge’s valuation to 1.1 times net assets, the cheapest level since Nov. 27. The index rallied 4 percent the next two trading days as the government pledged to take action to soothe markets and maintain growth in Asia’s fourth-largest economy. Trading was below average across Asian markets, with Hong Kong shut today and the U.S. closed yesterday for the Christmas holiday.

‘Supreme Commander’

North Korean state media began addressing Kim Jong Un by the “Supreme Commander” title held by his late father, signaling the regime’s new leader is tightening his control over the nation’s military. Kim Jong Un got his first chance to play the role of North Korean statesman as a former first lady from the South and the chairwoman of Hyundai Group visited to pay their condolences over the death of Kim Jong Il.

South Korea and China share a common interest in peace and stability on the Korean peninsula and need to be in close communication, said Park Suk Hwan, South Korea’s Vice Foreign Minister. Park made the comments to his Chinese counterpart Zhang Zhijun during a meeting in Seoul today that was partly open to the media.

LG Electronics, the world’s third-largest mobile-phone maker, slid 2.4 percent to 72,500 won. Samsung Electro-Mechanics, a maker of electronic parts, slipped 6.8 percent to 80,700 won after Woori Investment & Securities Co. said its sale of a stake in Samsung LED Co. for 283 billion won ($245 million) was lower than estimated.

Defense equipment manufacturer Speco Co. led gains among South Korean defense-related companies in Seoul, climbing 4.9 percent to 2,670 won. Huneed Technologies, a military communication equipment manufacturer, added 2.1 percent to 3,470 won.

The won fell 0.3 percent to 1,158.68 per dollar, after touching 1,160.09, the weakest since Dec. 20.

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