(2nd LD) Seoul shares tumble 4 pct on renewed U.S.-Iran tensions; won strengthens

Seoul's stock market suffered a 4 percent drop on Wednesday due to heightened tensions between the U.S. and Iran, which led to increased crude prices and inflation concerns. The Korea Composite Stock Price Index (KOSPI) fell 273.08 points, or 3.99 percent, ending a two-day winning streak. This downturn followed a series of U.S. airstrikes on Iranian targets near the Strait of Hormuz, which drove up oil prices and reignited inflation worries.

With a higher probability of a Federal Reserve rate hike during their upcoming meeting, major U.S. stock indices also declined, while the 10-year U.S. Treasury yield reached its highest level since January of the previous year.

Trading activity was subdued, with 321.2 million shares worth 18.6 trillion won (US$13.6 billion) changing hands. Losers outnumbered winners by a ratio of 734 to 137, with foreign and institutional investors selling a combined total of 3.9 trillion won, while individual investors bought shares worth 2.3 trillion won. Analyst Lee Kyung-min from Daishin Securities attributed the bearish sentiment to rising oil prices and increasing sovereign debt yields in key economies.

Among the affected companies, Samsung Electronics and SK hynix both experienced declines of 4.02 percent and 4.73 percent, respectively. Hyundai Motor and Kia, as well as LG Energy Solution and POSCO Future M, also saw significant drops. The Korean won strengthened against the U.S. dollar, reaching 1,368.7 won per dollar, up 1.7 won from the previous session.

Bond prices, which inversely correlate with yields, fell, with the yield on three-year Treasurys increasing by 5.2 basis points to 3.930 percent, and the return on five-year government bonds adding 6.1 basis points to 4.167 percent.