South Korea's industrial output in January expanded by 4.6 percent from December, its fastest pace in nearly 1-?  years, handily beating market projections.

The composite leading indicator, which presages economic activity in the coming months, staged its first month-on-month rebound in 13 months, data from Stastics Korea showed.

The March contract on three-year treasury futures lost 0.12 points to 102.84.

"Today's and yesterday's (CPI) data seems to erase uncertainties over future interest rate decisions," said a brokerage dealer. "Market interest rates may need to head back towards 4 percent."

Annual consumer inflation in February quickened at a faster rate than market expectations, data showed Wednesday.

But another broker said the turmoil in Libya had dented expectations for a rate rise.