The Korea Composite Stock Price Index (KOSPI) fell 1 percent to 1,934.27 points as of 0240 GMT, near a one-month low of 1,930 hit on Jan. 28.

"The index is under pressure after US and European stocks fell overnight. The lifeline thrown to Doosan E&C has also shed light on the plight of the construction and banking sectors which are leading the losses," said Kim Chul-joong, an analyst at Korea Investment & Securities.

The country's tenth biggest builder, Doosan Engineering & Construction said on Monday that it would issue 1 trillion won ($922 million) worth of new shares to raise much-needed cash.

A sluggish housing market has left both builders and lenders with unsold property, with indebted builders increasingly desperate for cash.

Banks and builders led the losses, with the sector sub-indices and down 2 percent and 2.4 percent respectively. Doosan E&C shed 3.2 percent.

Blue chip exporters continued their downward slide as a stronger local currency threatened to trim their repatriated earnings. SK Hynix, the world's second-largest memory chip-maker, fell 2.5 percent and shipbuilder Samsung Heavy Industries slid 2 percent.

Kia Motors bucked the trend, up 0.6 percent following Monday's 2.5 percent drop. Overall, declining shares outnumbered winners 605 to 176.

Foreigners and local institutions were net sellers near mid-session, weighing on the index. The KOSPI 200 benchmark of core stocks was down 1 percent, while the junior KOSDAQ edged 0.8 percent lower.