North Korea artillery firing sparks tumble

South Korean stock and bond  futures fell sharply and the won dipped in offshore forward  trading on Tuesday after artillery shells fired by North Korea  wounded several people and damaged buildings on a South Korean  island near the border. 

Residents from the island, about 10 km (6 miles) from the  maritime border with the North, were fleeing on fishing boats,  Seoul media reported, and witnesses said several civilians and  soldiers were wounded in the incident. 

The KOSPI 200 index futures for December delivery fell 2.44 per cent, while 1-month won forward fell more than 4 percent at one point in offshore trading, although recovering much of the losses later. 

President Lee Myung-bak convened an emergency meeting of  security ministers, while the central bank will hold a meeting  of senior officials from 0900 GMT to assess possible market impacts. Officials said it was not to review interest rates. 

Analysts said the additional impact on local markets from  the attacks - which were reported after the trading hours  ended on spot markets - could be bigger than during previous  conflicts because the latest incident involved damage to  civilian installations. 

"The North's provocation historically sent shock waves to  the stock market, which has subsequently returned to normal,"  said Lee Jae-man, analyst at Tong Yang Securities. 

"It will inevitably affect the local stock market - especially as it comes as foreigner buying is slowing and geographical risks are mounting." 

But some other analysts said the impact could be limited  or short-lived unless the conflict spread and continued. 

South and North Korea have been technically at war for  more than half a century because their 1950-53 conflict ended  only in a truce. 

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