South Korean shares trade marginally higher as inflation slows

South Korean shares traded slightly higher on Tuesday, as consumer inflation slowed to a 3-1/2-year low and supported the case for an imminent interest rate cut.

The won weakened, while the benchmark bond yield fell.

The benchmark KOSPI rose 2.77 points, or 0.14 per cent, to 2,684.75 by 0213 GMT, extending gains to a third straight session.

The KOSPI's recent gains have been kept to less than 0.5 per cent per day.

Trading on Tuesday was light across domestic financial markets after Wall Street's closing overnight for a holiday.

South Korea's consumer inflation slowed in August to the weakest in nearly 3-1/2 years and hit the central bank's medium-term target.

Chipmakers fell by less than 1 per cent, automakers dropped more than 3 per cent, but biopharmaceutical manufacturers rose.

Of the total 935 traded issues, 553 shares advanced, while 300 declined.

Foreigners were net buyers of shares worth 27.5 billion won ($20.52 million).

The won was quoted at 1,339.6 per dollar on the onshore settlement platform, 0.08 per cent lower than its previous close at 1,338.5.

In money and debt markets, September futures on three-year treasury bonds rose 0.02 point to 105.63.

The most liquid three-year Korean treasury bond yield fell by 0.6 basis point to 2.989 per cent, while the benchmark 10-year yield fell by 0.2 basis point to 3.113 per cent.