South Korean stocks fell Friday as investors were spooked by the financial stability of German banking giant Deutsche Bank. The Korean won fell against the US dollar.

The benchmark Korea Composite Stock Price Index declined 25.09 points, or 1.21 percent, to close at 2,043.63. Trade volume was moderate at 317 million shares worth 5.6 trillion won ($5.1 billion), with losers outnumbering gainers 654 to 169.

The local stock market opened lower following a sharp decline on Wall Street. Worries mounted over the German lender's financial viability after a report that some hedge funds had withdrawn their investments in Deutsche Bank.

Some analysts expect concerns over Deutsche Bank to continue to weight on the market.

"It may be difficult for Deutsche Bank to address the current difficulties in the short term, given minus interest rates in Europe and lower economic growth rates," said Kim In, an analyst at Eugene Investment & Securities.

Most large caps traded lower with market kingpin Samsung Electronics falling 0.12 percent to 1,598,000 won.

KB Financial Group declined 0.39 percent to 37,850 won, and Shinhan Financial Group fell 1.11 percent to 40,150 won.

Top automaker Hyundai Motor slipped 2.87 percent to 135,500 won, and its smaller affiliate Kia Motors traded 1.86 percent lower to end at 42,150 won.

Naver, the operator of the country's top Internet portal, fell 1.89 percent to 883,000 won.

The local currency was trading at 1,101.30 won against the US dollar, down 2.5 won from the previous session's close.

Bond prices, which move inversely to yields, closed higher. The yield on three-year Treasurys fell 3.5 basis points to 1.262 percent and the return on the benchmark five-year government bond slipped 4.2 basis points to 1.278 percent. (Yonhap)