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Markets rattled by N Korea test
Markets dip then recover as nuclear test sends jitters through Asian investors.
Last Modified: 25 May 2009 09:17
Analysts say investors have grown used to North Korea's unpredictability [Reuters]

North Korea's nuclear surprise test briefly shook stock markets across Asia, but most regained ground before the close as investors shrugged off the test as a political ploy.

In South Korea, Seoul's benchmark Kospi index plunged more than six per cent shortly after the first reports of the test emerged on Monday morning.

But the index regained ground to end the day just 0.2 per cent lower as investors bet the North's move would not spark a military conflict.

South Korea's currency, the won, also slumped 1.7 per cent immediately following news of the test, but recovered to end local trade down 0.1 per cent against the dollar.

In Japan the benchmark Nikkei index dipped on Monday as investors flinched in response to the first news flashes of the test, pairing gains earlier in the day.

But investors soon tempered their reaction, turning their attention to domestic issues and the upcoming week's economic reports, driving the Nikkei to end the day up 1.3 per cent.

Analysts said investors have grown used to North Korea's unpredictability and past experience had helped regional markets avert major turmoil as a result of the test.

"The news flash of North Korea's nuclear test initially spooked investors," Y.S. Rhoo, a market analyst at Hyundai Securities in Seoul told Reuters.

"But investors have learned over time that North Korea is more of a political than financial matter.

Source:
Agencies
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