Seoul shares dropped 1.7 percent on Monday to a two-month closing low, as flat-screen makers including LG.Philips LCD Co Ltd were hit by expectations for lower panel prices. Lenders such as Kookmin Bank and exporters were also dampened by lingering worries about the subprime mortgage fallout and its impact on the US economy, South Korea's No 2 export market.
The Korea Composite Stock Price Index ended down 1.7 percent at 1,893.47, its lowest close since September 18. The country's stocks are expected to remain under pressure as investors worry over the subprime-related losses at US financial firms, analysts said.
"Markets are unlikely to be free from the credit issues, causing foreign investors to keep selling local shares. Foreigners are expected to dump South Korean shares further as some of them may want to offset losses from subprime-related losses with gains in overseas stock markets," said Kim Joon-kie, an analyst at SK Securities.
Foreign investors sold a net 180.5 billion won worth of shares in the main stock market after having dumped 4.85 trillion won so far this month. Persistent concerns over a credit crunch and its impact on the US economy also hit banks and exporters.
Kookmin, South Korea's top lender, lost 3.4 percent to 68,200 won and Shinhan Financial Group declined 3.01 percent to 51,600 won. The country's top auto maker Hyundai Motor Co Ltd fell 1.57 percent to 68,900 won and its affiliate Kia Motors Corp slid 1.88 percent to 9,910 won.
Higher oil prices dampened energy cost-sensitive stocks including Korean Air Co, which fell 1.65 percent to 77,700 won, and state-run power provider KEPCO, which declined 3.44 percent to 39,300 won.
POSCO, the world's fourth-largest steel maker, also fell 1.89 percent to 571,000 won after a company official said it had not been able to start preliminary work for its planned steel plant in India. Samsung Electronics Co Ltd, the world's top large flat-screen maker, fell 2.87 percent to 541,000 won.
Rival LG.Philips shed 3.82 percent to 52,900 won, and its biggest shareholder LG Electronics Inc dropped 5.36 percent to 93,500 won. Institutional investors bought a net 2.4 billion won worth of shares and retail investors purchased a net 88.5 billion won, data showed as of 0637 GMT. Trade volume stood at 289 million shares valued at 5.05 trillion won, compared to 304 million shares worth 6.44 trillion won on Friday.
Decliners outnumbered advancers by 483 to 306, with 83 titles ending flat. The December KOSPI 200 futures index fell 4.55 points to 239.65, and the underlying KOSPI 200 spot index lost 4.35 points to 239.78. The junior and tech-heavy Kosdaq ended down 0.60 percent at 750.79.