South Korean companies' direct financing through issuing stocks and bonds dropped 10.2 percent in the first half of this year due to Europe's fiscal crisis and economic downturn in the United States and China, the financial watchdog said Tuesday.

Corporate financing through public offers such as equity issuance and bond sales amounted to 66.12 trillion won (57.7 billion U.S. dollars) during the January-June period, down 10.2 percent from the same period of last year, according to the Financial Supervisory Service (FSS).

The first-half decline was attributed to weak demand for funds stemming from the European fiscal crisis and concerns over economic slump in the United States and China. Volatility in the local stock market also contributed to weak demand for facility investment by domestic companies, the watchdog said.

Equity financing, including initial public offering (IPO) and rights offering, came in at 914.3 billion won in the first half, down 86.3 percent from the same period of last year. The first- half IPO plunged 84.6 percent to 247.9 billion won, while rights offering tumbled 86.8 percent to 666.4 billion won over the same period.

Debt financing, or bonds issued by industrial companies and financial firms, stood at 65.2 trillion won for the first six months of 2012, down 2.6 percent from a year before, according to the FSS. Bond sales by industrial firms, financial institutions and credit card issuers retreated 10.1 percent, 7.1 percent and 17. 8 percent each, but the asset-backed securities (ABS) issuance jumped 67.9 percent.