The business outlook among major South Korean companies hit its weakest in more than three and half years on U.S. credit woes and higher prices for oil and raw materials, a private survey showed on Tuesday.

The Federation of Korean Industries (FKI), the country’s biggest lobby group for large companies, said its business survey index fell to a seasonally adjusted 88.9, the lowest since 82.4 in Jan. 2005.

The index was a revised 90.9 in July and 96.1 in June.

A reading below 100 means most companies expect their business conditions to worsen rather than improve.

“Six hundred major companies had the weak outlook on flying oil and commodity prices and as worries about U.S. top two mortgage firms mounted, boosting uneasiness in the global financial markets,” said FKI in a statement.

The index was based on a poll of the country’s top 600 companies by annual sales.

The data comes ahead of a central bank review of interest rates on Aug. 7.

The Bank of Korea held interest rates steady at 5.0 percent in July for 11 months in a row after raising rates a total of 50 basis points in July and August last year.

Source: http://www.afxnews.com

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