South Korean stocks closed 0.88 percent down Tuesday as Italy’s high borrowing costs underpinned nagging concerns about the eurozone debt crisis, analysts said. The local currency fell against the U.S. dollar.

The benchmark Korea Composite Stock Price Index declined 16.69 points to close at 1,886.12, snapping the second straight session of gains. Trading volume was moderate at 355.8 million shares worth 4.74 trillion won ($4.21 billion) with losers outpacing gainers 543 to 280.

“As Europe’s debt problems continue to flare up, the local stock markets are having difficulty finding momentum for upside movement,” said Bae Sung-young, an analyst at Hyundai Securities Co.

“As for the local front, a set of data pointing to the economic slowdown also weighed on the market.”

Bae said the Seoul market may trade in a narrow range due to a lack of upward momentum up until late this month when finance ministers from the European Union meet.

The KOSPI extended its earlier losses in late trading as foreign and institutional investors continued to shed their holdings in local stocks, sending the index down as much as 1.28 percent at one point.

Foreign investors unloaded a net 85.7 billion won worth of Seoul shares on the main bourse.

Investor sentiment remained fragile, undergoing ups and downs in accordance with news related to the eurozone debt crisis.

Italy sold 3 billion euros in five-year government bonds on Monday, with an interest rate of an over 14-year high of 6.29 percent, rekindling concerns that it would take time for the eurozone debt distress to settle down.

Financial shares were under selling pressure. No. 2 banking group KB Financial Group fell 2.13 percent to 39,050 won and its rival Shinhan Financial declined 0.37 percent to 40,650 won.

Chip giant Hynix Semiconductor declined 1.12 percent to 22,050 won after top mobile carrier SK Telecom said it will pay 3.43 trillion won for a 21.05 percent stake in the chipmaker. SK Telecom, the sole bidder for Hynix Semiconductor, was picked as the preferred bidder on Friday, which will help the long-pending sale of the world’s No. 2 computer memory chipmaker. SK Telecom lost 1.34 percent to 147,000 won.

Oil refiners lost ground on prospects that a fall in oil prices would cut their profit margins. Top refiner SK Innovation shed 1.65 percent to 178,500 won and its rival S-Oil fell 2.45 percent to 119,500 won.

Leading carmaker Hyundai Motor fell 0.65 percent to 230,000 won and its affiliate Kia Motors shed 1.74 percent to 73,500 won.

The local currency closed at 1,126.10 won to the greenback, down 2.9 won from Monday’s close, as foreign investors unloaded local stocks, dealers said. 

(Yonhap News)