S Korea plans more steps to combat global downturn on its economy

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SEOUL, Oct 29 (Reuters): South Korea readied more measures to combat a global downturn on its export-driven economy but a lack of confidence they would work pushed shares lower Wednesday after their biggest swing on record.
The battered won rose for the first time in seven sessions on prospects for global rate cuts, but stocks gave up an 8-per cent gain to close down in volatile trading partly fuelled by speculation the country might seek International Monetary Fund (IMF) support.
Authorities denied the speculation, which had provided an uncomfortable reminder of the country's IMF-led bailout in the Asian financial crisis a decade ago.
"Rumors about the IMF blew up out of proportion," said Oh Hyun-seok, a senior market analyst at Samsung Securities.
"South Korea may request a currency swap with the IMF, but this is in no way the kind of help countries like Iceland are getting. People freak out whenever they hear the word 'IMF' as it conjures up the memory of Asian currency crisis in 1997," Oh said.
South Korea's financial markets have taken a beating in the past month on concern the country's banks could fall victim to the global credit crunch that has toppled financial institutions in from the United States to Iceland.
Adding to a raft of measures announced in the past month to fend off the global crisis, the government said it would ease won liquidity requirements on banks to help bring down their funding costs.
The country's parliament could pass as early as Thursday a 100-billion-dollar plan to help banks by guaranteeing their future foreign debt borrowings.
The government also plans to announce, around the weekend, steps to boost sectors such as construction, a local online media outlet quoted a presidential spokesman as saying.
Stimulus measures, including increased government spending, cuts in income and other taxes are also on the cards, the daily JoongAng Ilbo newspaper reported, citing financial government sources.