(LEAD) Seoul shares end higher on chip rally

South Korean stocks ended higher Thursday, as chipmakers surged on hopes for a business turnaround and investors digested the Federal Reserve's latest interest rate hike. The local currency fell against the U.S. dollar.

The benchmark Korea Composite Stock Price Index added 11.45 points, or 0.44 percent, to close at 2,603.81. Trading volume was heavy at 585.77 million shares worth 23.79 trillion won (US$18.62 billion), with gainers outpacing losers 729 to 174.

The index moved within a tight range following the previous session's losses but had risen to nearly 1 percent before ending with modest gains.

Institutional and offshore investors bought a net 437.89 billion won and 78.9 billion won worth of shares, respectively, while individuals shed a net 506.06 billion won worth of shares.

"We've seen greater market volatility due mainly to a frenzy for battery shares," said Kim Ji-san, an analyst at Kiwoom Securities Co.

In macroeconomic terms, the Fed raised interest rates Wednesday by a much-anticipated quarter of a percentage point to the 5.25 percent to 5.50 percent range, the highest level in more than 22 years.

Finance Minister Choo Kyung-ho told a meeting that the government will closely monitor the market as the Fed's latest decision pushed the gap between the key rates of South Korea and the U.S. to an all-time high.

In Seoul on Thursday, top-cap shares ended mixed, with chipmakers' rally offsetting a fall in battery and steel shares.

Market bellwether Samsung Electronics jumped 2.72 percent to 71,700 won after it announced plans to extend production cuts amid expectations for a recovery in demand, though it reported a 95 percent fall in second-quarter operating profit.

Smaller rival SK hynix surged 9.73 percent to 124,000 won.

But LG Energy Solution dropped 6.9 percent to 540,000 won on profit-taking. The leading battery maker said its second-quarter operating profit more than doubled on-year on growing battery demand for electric vehicles.

LG Chem dived 9.62 percent to 658,000 won after reporting a 30 percent fall in its second-quarter profit on sagging global demand.

Samsung SDI retreated 5.83 percent to 662,000 won following recent gains, as it announced a 4.9 percent increase in the second-quarter operating income.

POSCO Holdings skidded 5.71 percent to 594,000 won, and POSCO Future M dropped 13.21 percent to 486,000 won.

Carmakers traded mixed. Top automaker Hyundai Motor retreated 0.45 percent to 197,800 won, while its affiliate Kia rose 0.61 percent to 83,100 won after logging a solid growth in the second-quarter net profit.

Among gainers, major bio firm Samsung Biologics advanced 8.8 percent to 791,000 won, and internet giant Naver went up 6.98 percent to 211,500 won.

The local currency ended at 1,277.7 won against the U.S. dollar, down 3.2 won from the previous session's close.

Bond prices, which move inversely to yields, closed higher. The yield on three-year Treasurys fell 4.0 basis points to 3.587 percent, and the return on the benchmark five-year government bond lost 3.4 basis points to 3.588 percent.

Source: Yonhap News Agency