S Korea says US market turmoil won't end soon, calls for calm

South Korea should brace for more fallout from the US financial turmoil, top officials said today, calling for concerted efforts to calm local markets.     

The won fell 4.3 per cent against the dollar yesterday, its biggest daily drop in a decade, in response to Lehman Brothers' collapse.

The stock market fell 6.1 per cent yesterday but was up in early trading today, as was the won.     

The KOSPI share index had advanced 46.68 points, or 3.36 per cent, to 1,434.43 as of 0220 GMT.     

"The US's financial woes are not likely to end soon," Prime Minister Han Seung-Soo told a cabinet meeting.     

The finance ministry, the watchdog Financial Services Commission (FSC) and the central bank "should deliver a coherent message to the market and come up with prompt and appropriate measures in mutual cooperation," Yonhap news agency quoted him as saying.     
"As we have seen during rumours of a 'September crisis', psychological pressure greatly affects the market so we need to prevent public anxiety from spreading."     

Local markets earlier this month were roiled by unfounded fears of capital flight when bonds held by foreigners matured.     

"The US financial market is very unstable and a short- term effect on the Korean economy is unavoidable," Han cautioned.     

Bank of Korea (central bank) governor Lee Seong-Tae said the local economy would likely face a "difficult time" for a while.     

The fallout from the US crisis on the domestic economy had just begun, he told parliamentarians, but added that foreign exchange reserves, around $243 billion, were enough to deal with any external shocks.