South Korean stocks traded 0.08 percent lower late Monday morning on subdued investor sentiment following Wall Street's sharp losses on Friday, despite the upgrade of the country's rating by Moody's.

The benchmark Korea Composite Stock Price Index inched down 1.5 points to 1,973.82 as of 11:20 a.m.

Shares gained ground in early morning trading after Moody's Investors Service on Saturday upgraded South Korea's credit rating one level to Aa3, citing its prudent fiscal stance, but foreign-led selling soon weighed down on the overall market.

Auto shares were down after reports broke out that Hyundai Motor Group will take over a 23-percent stake in its auto financing joint venture from its U.S. partner, GE Capital, on Tuesday.

Top automaker Hyundai Motor declined 1.62 percent and its sister company Kia Motors retreated 2.68 percent.

Korea Aerospace Industries, South Korea's sole aircraft maker, slipped 3.11 percent after a T-50 trainer jet crashed during an air show in Indonesia on Sunday, killing the two pilots aboard. The cause of the crash of the South Korea-made light attack fighter is not yet known.

The local currency was changing hands at 1,177.5 won against the greenback as of 11:20 a.m., up 5.5 won from Friday's close. (Yonhap)