South Korean stocks retreated Wednesday on the increase in the value of US currency and the valuation pressure of local stocks. The Korean won rose against the US dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) fell 8.58 points, or 0.28 percent, to close at 3,061.42 points.

Trading volume was moderate at about 1.1 billion shares worth some 14.2 trillion won ($12.5 billion), with gainers outnumbering losers 476 to 378.

Foreigners sold a net 297 billion won, while retail investors purchased 641 billion won. Institutions offloaded a net 348 billion won.

After a choppy start, the KOSPI peaked near the 3,100-point mark in the morning, as foreigners bought on expectations of a US stimulus plan set to be unveiled later this week.

Stocks dipped in the last hour of trading, however, as foreigners turned to net selling on increased valuation pressure and concerns over the yield hike in US 10-year Treasury notes.

"The appreciation in US dollar currency and the increase in the US Treasury yields seem to have weakened the KOSPI's performance," Kiwoom Securities analyst Kim Yoo-mi said.

By sector, financials and telecommunications performed well, while tech and auto slumped.

In Seoul, top cap Samsung Electronics lost 0.97 percent to 81,400 won, and No. 2 chipmaker SK hynix shed 1.49 percent to 132,500 won.

Giant internet portal operator Naver edged up 0.13 percent to 377,000 won, with its rival Kakao moving up 0.91 percent to 498,000 won.

Pharmaceutical giant Samsung Biologics inched up 0.13 percent to 748,000 won, and leading chemical firm LG Chem retreated 0.37 percent to 805,000 won. Top automaker Hyundai Motor declined 0.68 percent to 218,000 won.

The local currency closed at 1,131.8 won against the US dollar, up 1.8 won from the previous session's close.

Bond prices, which move inversely to yields, closed higher. The yield on three-year Treasurys lost 2.2 basis points to 1.133 percent, and the return on the benchmark five-year government bond fell 0.6 basis point to 1.601 percent. (Yonhap)