The Seoul bourse rallied yesterday (November 3) on eased financial woes following an economic stimulus package announced by the Korean government and the recent currency swap deal with the United States, analysts said. The local currency rose 29 won to finish at 1,262 won against the dollar.

The benchmark KOSPI climbed 16.02 points, or 1.44 percent, to 1,129.08. The tech-heavy Kosdaq gained 17.53 points, or 5.69 percent, to finish at 325.56 points.

Steep gains caused the Korea Exchange to halt program trading in early trading for five minutes.

The government yesterday unveiled an economic stimulus plan which includes 14 trillion won (US$10.7 billion) in additional spending and a tax cut next year to stimulate the slumping economy.

Lee Sun-yup, an analyst at Goodmorning Shinhan Securities, said that the Seoul bourse extended rallies as investor sentiment was fortified by the economic stimulus package.

"Foreign investors' purchase also added to the upturn of the stock index," he said.

Han Chi-hwan, an analyst at Daewoo Securities, said that investors' positive outlook based on the recent $30 billion currency swap deal with the United States continued through yesterday.

"The market is not expecting much from the government's stimulus package. However, it has shown a hint of recovery, continuing the effects of the currency swap deal with the United States," the analyst said.

Han, however, said it is too early to expect a full market recovery.

"Factors concerning the economic crisis still remain and it is too early to be positive. We will have to see the Bank of Korea's next decision on the interest rate," the analyst said.

Shares in the finance industry jumped as investor jitters calm down on hints of economic stabilisation. Hana Financial Group gained 4.50 per cent to end at 20,900 won and Woori Financial Holdings rose 6.38 per cent to 7,160 won. Shinhan Financial Group rose 5.91 per cent to finish at 33,150 won.

Securities shares also climbed following the banking sector. Mirae Asset Securities rose 7.46 percent to 67,700 won and Eugene Investment & Securities soared 14.91 percent to 1,040 won.

Shipyards also continued its rally after falling heavily on the global financial turmoil. Samsung Heavy Industries rose 14.94 per cent to 22,300 won and Doosan and Hyundai Heavy Industries also rose by 5.04 per cent and 4.20 per cent, respectively.

The government's liquidity support for construction companies was not enough to tame investor jitters in the housing sector as construction shares continued their weak performance. GS Engineering & Construction shed 7.33 percent to 55,600 won and Hyundai Engineering & Construction fell by 4.21 per cent to 50,000 won.