Seoul Shares Tumble to Year’s Lowest on Panic Selling

South Korean stocks tumbled Tuesday as investor sentiment went sour over a global credit crunch and a possible monetary tightening.

The benchmark Korea Composite Stock Price Index (KOSPI) tumbled 46.25 points, or 2.93 percent, to 1,533.47, the year's lowest. Volume was moderate at 323.4 million shares worth 5.22 trillion won ($5.05 billion), with losers outpacing gainers 724 to 100.

Analysts said market sentiment remains weak on inflation risks and foreigners' selling spree. They unloaded South Korean stocks for the 22nd straight session.

Financials took a hit on monetary tightening fears. Top lender Kookmin Bank plunged 8.64 percent to 55,000 won after JPMorgan Chase & Co. cut its recommendations for the shares from "overweight" to "neutral," citing that the lender may not have enough capital to turn itself into a financial holding company.

Builders also lost ground on concerns that higher inflation will dampen consumer spending and housing demands. No. 1 builder Daewoo Engineering & Construction fell 6.43 percent to 13,100 won.

Tech blue chips traded lower with market leader Samsung Electronics declining 3.42 percent to 593,000 won.

The tech-savvy Kosdaq market also plunged 3.42 percent to 515.92.

The Korean currency closed at 1,032.70 won against the dollar, up 10.20 won from Monday's close, on rumors of a possible dollar sale by the foreign exchange authorities to prop up the local currency and tackle inflation.