South Korean stocks closed 0.45 percent lower Wednesday as investors sat on the sidelines over uncertainties stemming from the financial policies of the United States and Japan, analysts said. The local currency fell against the U.S. dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) lost 9.04 points to finish at 1,988.06. Trading volume was low at 285.6 million shares worth 4.24 trillion won (US$3.94 billion) with losers outpacing gainers 417 to 387.

Analysts said Seoul shares closed lower due to the rising financial uncertainties from the U.S. and Japan, which sparked investors to take a wait-and-see approach.

The uncertainties came as the U.S. Democratic and Republican parties are at odds over the country's budget plans and debt-ceiling, while the Japanese government is mulling over increasing taxes.

"Investors are taking a wait-and-see approach as key political decisions are yet to be made in the U.S. and Japan," said Park Sung-hoon, a researcher at Woori Investment & Securities.

Han Chi-hwan, a researcher at KDB Daewoo Securities Co., echoed the view, adding that the local stock market was also dented on the gloomy outlook over the U.S. economy.

Foreigners purchased more shares than they sold for the 21st consecutive session at a net 190.2 billion won. Individuals also bought a net 115.1 billion won, while institutions offloaded a net 291.2 billion won.

Tech shares traded lower, with top player Samsung Electronics falling 0.66 percent to 1,364,000 won, and leading chipmaker SK hynix losing 2.46 percent to 29,750 won. Flat panel maker LG Display shed 2.37 percent to 26,800 won.

Carmakers also closed bearish, with No. 1 Hyundai Motor falling 0.39 percent to 254,000 won and its smaller affiliate Kia Motors losing 2.05 percent to 67,000 won. Hyundai Mobis, a top auto parts maker, shed 0.34 percent to 295,000 won.

Financial firms also lost ground, with Samsung Life Insurance falling 0.48 percent to 103,000 won and KB Financial losing 1.42 percent to 38,050 won. Samsung Fire & Marine Insurance also moved down 0.4 percent to 246,500 won.

In contrast, NAVER, the country's top Internet portal provider, gained 2.21 percent to 555,000 won on rosy prospects for its mobile messenger service LINE.

The local currency ended at 1,076.70 won against the greenback, down 4.5 won from Tuesday's close, dealers said. (Yonhap news)