SEOUL: Seoul shares fell on Tuesday as rising bond yields in Italy and other euro zone countries rekindled worries that the debt crisis in Europe is a long way from being resolved, even after leadership changes in Italy and Greece.
German Chancellor Angela Merkel said on Monday that Europe could be living through its toughest hour since World War Two as new leaders in Italy and Greece rushed to form governments and limit the damage from the euro zone debt crisis.
"The market has recovered its early November level and trade will likely be thin at its current position," Bae Sung-young, a market analyst at Hyundai Securities, said, adding that the KOSPI would hover between its 60 and 120-day moving averages of around 1,820 and 1,950 points, respectively.
Foreign investors were sellers of a net 35.4 billion won ($31.5 million) worth of stocks, and investment managers offloaded a net 27.8 billion won, poised to snap two sessions of buying.
The Korea Composite Stock Price Index (KOSPI) was down 0.52 percent at 1,892.69 points as of 0124 GMT.
Hynix Semiconductor rose 0.9 percent after SK Telecom agreed to buy a 21 percent stake in the memory chip maker for $3 billion.
Shares in SK Telecom shed 1 percent.
LG Display outperformed, rising 1.5 percent on reports the company's CEO was scheduled to meet with Apple CEO Tim Cook, raising hopes of new supply deals. The flat-screen maker is a key supplier to Apple.
"There is a lot of buzz around the marketplace (about) the possibility of LG Display winning a large deal to supply components for new Apple products," said Yoon Hyuk-jin, an analyst at Shinyoung Securities.
An LG Display spokeswoman denied the rumours, saying while the company's CEO had scheduled for a US business trip he had no plans to meet Cook.
Banking stocks came under pressure after their US peers fell sharply.
KB Financial Group lost 1.9 percent and Hana Financial Group shed 2.2 percent.
Woori Investment & Securities fell 2.2 percent and Mirae Asset Securities shed 2 percent.
"Shares in brokerages and securities firms are closely tracking the movements in the KOSPI," said Park Jin-hyung, an analyst at IBK Securities.
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