Analysts said uncertainty over the stability of the North's leadership succession would determine the market's direction in the days ahead. The North's official news agency said Kim's son, Kim Jong-un, was named "the great successor" to his father. "The key focus will be how the succession proceeds. Kim Jong-il had been in his late-30s when his father died, but Kim Jong-un is still pretty young, in his early-20's," said Bae Sung-young, a market analyst at Hyundai Securities, adding that it was difficult to predict whether North Korean policies might change. The Korea Composite Stock Price Index ended down 3.43 percent at 1,776.93 points, a three-week closing low and the biggest daily percentage drop in nearly six weeks. Earlier in the session, the index was down as 4.9 percent. "Obviously investors have learned over time to react to North Korean news with some degree of calm, although it is hard to make simple comparisons this time," said Kim Seong-bong, a market analyst at Samsung Securities. Fitch ratings said on Monday that Kim's death did not warrant a negative move on South Korea's A+ rating. "What investors do not want to see is defensive aggressions by North Korea, anything that would cause tension," Kim added. Foreign investors were modest sellers of a net 206.3 billion Korean won ($178.05 million) worth of stocks, while institutions were buyers of a net 102.7 billion won. Key large-cap shares led falls, with LG Electronics , the world' No.3 handset maker, ending down 4.7 percent and LG Display, the world's No.2 flat panel maker, shedding 5.3 percent. Refiners lost ground. Shares in SK Innovation, the country's top automaker, fell 6.4 percent and GS Holdings, the holding company of the country's No.2 refiner GS Caltex, lost 5.4 percent. But defence stocks and food makers jumped. Shares in military equipment makers Victek and Huneed Technology both rallied by their daily limit of 15 percent. Instant noodle makers Nong Shim rose 2.7 percent and Sam Yang Foods leapt 15 percent amid expectations these companies would benefit if there was a rush to hoard food staples to prepare for potential emergency events.