South Korean stocks closed lower on Monday as investors took to the sidelines over the growing possibility of a rate hike in the United States in the near future.

The Korean won dropped against the U.S. dollar.

The benchmark Korea Composite Stock Price Index shed 2.04 points, or 0.1 percent, to close at 1,967.13. Trade volume was moderate at 541 million shares worth 4.53 trillion won ($3.89 billion), with losers outpacing gainers 489 to 315. 


The local stock market got off to a weak start after U.S. Federal Reserve Chair Janet Yellen delivered a speech on Friday, backing an interest rate hike in June.

"The U.S. dollar's ascent versus global peers, coupled with concerns over a slowdown in China, may work to increase volatility in the local stock market," said Lee Kyong-min, an analyst at Daishin Securities.

Institutions offloaded a net 124 billion won worth of shares, while foreign investors bought a net 121 billion won.

Steelmaking, banking and brokerage stocks were in negative terrain, while logistics and telecom stocks advanced.

Large caps closed mixed, with market bellwether Samsung Electronics down 0.16 percent to 1,248,000 won.

Top automaker Hyundai Motor advanced 0.37 percent to 136,500 won, and its smaller affiliate Kia Motors fell 1.29 percent to 45,750 won.

Auto parts giant Hyundai Mobis, also an affiliate of Hyundai Motor, shed 0.39 percent to 254,500 won.

LG Chem, the country's top chemicals maker, slipped 0.73 percent to end at 273,000 won, and POSCO, the No. 1 steelmaker, dropped 0.24 percent to close at 208,000 won.

Hyundai Merchant Marine surged by the daily permissible limit of 30 percent to close at 15,850 won on news that its talks to cut chartered rates have made "significant" progress.

The local currency closed at 1,191.80 won against the U.S. greenback, sharply down 12.5 won from the previous session's close. (Yonhap)