S.Korean bond rally pauses, eyes on rate reviews

SEOUL, Nov 3 - South Korean government bonds held mostly steady on Tuesday on caution following a one-week rally and as traders sought more clarity in the market's direction after U.S. and domestic interest rate meetings due until next week.

The benchmark five-year treasury bond yield <KR5YT=KSDA> ended steady at 4.93 percent, after having dropped by 17 basis points over the past week. December treasury bond futures <KTBc1> rose 6 ticks to 108.8.

"Traders felt unsure whether the market has gone too far or still has more room to gain, and so opted to wait for a while until the market's direction becomes clearer," said Shin Dong-su, a fixed-income analyst at NH Investment & Securities.

The U.S. Federal Reserve plans to announce the results of its two-day policy meeting later this week, while the Bank of Korea plans to set its policy rate next week.

The Australian central bank's widely expected move to raise its policy interest rate for a second time in as many months came as no surprise to investors in South Korean bonds.

The reaction from global financial markets to the outcome from the Group of 20 financial leaders meeting this weekend would also influence the domestic market, analysts said.

close prev close 5-yr treasury bonds 4.93 pct 4.93 pct 3-yr treasury bonds 4.43 pct 4.43 pct 1-yr monetary stabilisation bonds 3.47 pct 3.49 pct 3-mth certificates of deposit 2.79 pct 2.79 pct Average call rate 2.00 pct 2.05 pct 6-mth *KORIBOR 3.24 pct 3.24 pct * Korea interbank offered rate