SEOUL (REUTER) - South Korea`s currency took a battering on Wednesday as the government warned that protracted strikes would make it harder to wrestle down a stubborn trade deficit. And although the stock market rallied on relief that the latest round of strikes was fizzling, fund managers cautioned there was little to cheer about in the short term. The South Korean won plunged to a new six-year low as traders scrambled for dollars on expectations strikes would deal another blow to exports, already suffering from plunging world prices for semiconductors and other key products. Traders said the central bank pumped dollars into the interbank market to try to brake the won`s decline. Trade Minister Ahn Kwang-koo warned that work stoppages could make it harder for the country to control its snowballing trade deficit. Independent analysts said another two weeks of industrial action could add as much almost $3 billion to this year`s shortfall. Official figures show export losses due to strikes have already mounted to $400 million. The stock market jumped for the second straight day. Investors took heart from a lacklustre response to union calls for two days of all-out stoppages on Tuesday and Wednesday and indications that foreign buying was picking up. However, Asian fund managers said poor economic fundamentals would soon renew pressure on shares despite a recent recovery from a heavily oversold position late last year. More bad news on strikes was likely to send the index skidding back towards the 600 level, they said. "In the long term, Korea must be a good buying opportunity but in the short term, it may be worth our while to wait for a clearer solution to the labour situation," said Stephen Leung, chief investment officer at BZW Asia in Hong Kong. Matthew Choi, Korean fund manager at Thornton Management (Asia) Ltd, said the picture would have to improve substantially in the second half for any sustained market recovery. Brokers said buying was increasing on hopes for lower interest rates and an expected fall in U.S. stocks this year that could trigger a movement of funds to Asia. Analysts say interest rates now hovering over 12 percent were expected to drop amid falling corporate cash demand due to a slowdown in capital investment. The central bank plans to cut the reserve requirement rate by two percentage points to an average of 3.5 percent during the first half of this year. The cut in the proportion of deposits that banks must place as reserves with the central bank is widely expected to be followed by a drop in bank lending rates.