Seoul shares end 0.5 pct lower

“Renewed worries about European banks have dampened sentiment. Investors have grown more cautious on the economic outlook as well,weighing on techs,” said Lim Dong-min,a market analyst at KB Investment & Securities.

Foreign investors were sellers of a net 82.5 billion won ($70.09 million) worth of stocks,snapping a four-session buying streak.

Banking stocks retreated as worries about European banks resurfaced after the Wall Street Journal reported major European lenders understated holdings in potentially risky government debt during tests designed to probe banks’ strength.

“The report has reignited fears about European banks,weakening appetite towards the broader banking sector,” said Ku Yong-uk,an analyst at Daewoo Securities.

Shares in KB Financial Group declined 1.4 per cent and Shinhan Financial Group dipped 2 per cent,further weighed by regulatory investigations of its group chairman over alleged financial irregularities.

Memory chip makers retreated after an outlook warning from Samsung Electronics and a 2 per cent drop in the US Philadelphia semiconductor index.

Shares in Hynix Semiconductor,the world’s No.2 memory chip maker,fell 3.5 per cent and Samsung Electronics lost 2.2 per cent. Samsung,the world’s No.1 memory chip maker,warned of an oversupply in the computer memory chip market from next quarter as a sputtering global economy may further weaken PC sales.

Shares in construction firms operating in Iran sank after South Korea said on Wednesday it would ban investment and construction contracts in Iran-related petroleum resources and restrict the Seoul operations of an Iranian bank accused of facilitating Tehran’s efforts to develop nuclear weapons.

“Some construction projects that have not been started may get cancelled…we will probably see a slowdown in future orders,” said Kang Seung-min,an analyst at NH Investment & Securities.

Daelim Industrial shed 1.9 per cent and GS Construction fell 1.5 per cent.

Shares in firms with business interests in North Korea rose amid signs of easing tension on the peninsula.

North Korea has asked South Korea for rice aid following severe flooding this year,the South’s Unification Ministry said late on Tuesday,following the North’s announcement on Monday it was releasing the seven-man crew of a South Korean fishing boat.

Romanson,a watch maker with production plants in a joint factory park in Kaesong,North Korea,jumped 7.9 per cent.