South Korea Stocks Fall to Lowest in 2 Months; Posco Leads Drop

South Korean stocks fell for a third day to close at their lowest in two months. Posco and Hyundai Heavy Industries Co. lead the declines on concern China may raise interest rates to cool economic growth.

``The global equity markets are still sensitive to worries about China's tightening policies and a slowdown in the U.S.,'' said Seo Jung Ho, who manages the equivalent of $640 million at UBS Hana Asset Management Co. in Seoul. ``Nothing much has changed in the overall environment and concerns are lingering.''

The Kospi index declined 32.73, or 1.7 percent, to 1,893.47 at the close in Seoul, the lowest since Sept. 18. The Kosdaq index lost 0.6 percent to 750.79. Kospi 200 futures expiring in December dropped 1.9 percent to 239.65, while the underlying index slid 1.8 percent to 239.78.

Posco, Asia's third-largest steelmaker by output, slid 11,000 won, or 1.9 percent, to 571,000. Hyundai Heavy, the world's biggest shipbuilder, dropped 21,000 won, or 4.5 percent, to 447,000. Samsung Electronics Co., South Korea's largest exporter, fell 16,000 won, or 2.9 percent, to 541,000. China is South Korea's largest export market.

The China Banking Regulatory Commission said it's giving ``guidance'' to banks to cool lending that's already topped its goal of 15 percent growth this year.

The Wall Street Journal reported that authorities have asked banks to freeze lending in order to curb ``runaway investment.'' Lai Xiaomin, a Beijing-based spokesman for the commission, said today there is no lending freeze.
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