South Korean stocks closed nearly 1 percent lower Monday, driven by a steep decline in Samsung Electronics Co., following the company's disappointing earnings estimates for the second quarter release last week, analysts said.

The local currency sharply fell against the U.S. dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) finished down 16.46 points to 1,816.85. Trading volume was light at 299.5 million shares worth 3.48 trillion won (US$3.05 billion) with decliners far outstripping gainers 560 to 247.

"The earnings guidance on Friday gave investors a dim outlook on the company's overall performance for the second half," said Kim Hyung-ryeol, an analyst at Kyobo Securities Co.

The world's top maker of smartphones, memory chips and flat-panel TVs put its operating income for the April-June period at a record 9.5 trillion won, lower than the market consensus of 10.2 trillion won.

The top-cap firm that accounts for about 17 percent of the total market cap on the main bourse tumbled 3.24 percent to close at 1,226.000 won.

But Kim noted that the market behemoth may have been overestimated by analysts as the biggest South Korean company and now its share prices are going through adjustments.

"Samsung Electronics shot up 43 percent last year against its annual return rate, and its shares have gained for the last four years," he said.

Foodmakers and telecom companies were among the biggest losers.

Leading confectionery maker Orion plummeted 6.74 percent to 941,000 won, with LG Uplus, South Korea's smallest mobile carrier, slumping 4.15 percent to 12,700 won.

In contrast, autos and steelmakers gathered ground. Hyundai Motor rose 0.23 percent to 214,000 won and POSCO climbed 1.18 percent to 300,000 won.

The local currency ended at 1,152.30 won against the greenback, down 10.0 won from Friday's close, largely due to the KOSPI's fall amid a strong dollar, dealers said.

Bond prices, which move inversely to yields, closed lower. The yield on three-year Treasuries gained 0.05 percentage point to 3.00 percent and the return on the benchmark five-year government bonds soared 0.09 percentage point to 3.31 percent. (Yonhap News)