SEOUL: Seoul shares retreated on Monday, weighed down by technology stocks and refiners, with investors cautious as European leaders grapple with the region's debt crisis and as a US bipartisan committee inched closer to a deficit reduction deadline.
"There are two things that investors are keeping close eye on this week: how European debt resolutions progress and key developments in the United States -- namely how its budget decision and Black Friday shopping fare," said HI Investment & Securities market analyst Kim Seung-han.
News that a months-long effort to set US finances on a sustainable course appeared likely to end in failure, with lawmakers unable to bridge a deep divide over taxes and benefits, added to downward pressure.
The Korea Composite Stock Price Index (KOSPI) was down 1.17 percent at 1,817.63 points as of 0227 GMT.
Hana Financial Group Inc rose 4.1 percent after South Korea's financial watchdog on Friday ordered US buyout fund Lone Star to sell its controlling stake in Korea Exchange Bank (KEB), with Hana seen as the sole likely buyer.
"The court ruling makes Hana Financial's takeover of KEB all the more likely," said Kyobo Securities analyst Hwang Suk-kyu.
The acquisition of KEB is expected to help Hana Financial more rapidly expand its presence in the banking industry and allow it to catch up with bigger rivals KB Financial Group Inc and Woori Finance Holdings Co Ltd.
KEB shares fell 1.8 percent.
Technology issues and refiners weighed, with Samsung Electronics Co Ltd down 1.7 percent and S-Oil Corp dropping 4.8 percent.
Korea Electric Power Corp rallied 4 percent amid expectations of tariff increases after board members of the state utility agreed to seek a rise of about 10 percent in electricity fees, a spokesperson told Reuters.
STX Corp shares rose 4.2 percent, boosted by unlisted subsidiary STX Heavy Industries announcing on Sunday that it had won a $2 billion contract for a construction project in Saudi Arabia.
Retailers recovered after their latest streak of falls.
Lotte Shopping Co Ltd rose 2.9 percent and Shinsegae Co Ltd gained 1.6 percent.
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