South Korean shares fell 1.7 percent on Monday, led by Hynix Semiconductor Inc and Hyundai Motor Co, as fears over a fresh outbreak of Sars in China dented appetite for stocks across most of Asia.
Market leader Samsung Electronics Co Ltd, SK Telecom Co and steel giant POSCO also finished lower.
"The outbreak of Sars provided a timely excuse for the Korean market to take a break from its recent bull-run," said Shin Dong-min, an analyst at Daewoo Securities Co.
Seoul shares closed at a two-year high in the previous session on the back of robust foreign buying.
The main Korea Composite Stock Price Index (KOSPI) ended 1.74 percent lower at 919.74 points. Chinese health authorities said four new suspected cases of the potentially deadly Severe Acute Respiratory Syndrome (Sars) were reported in Beijing at the weekend.
The news hit airline stocks on concerns that passenger traffic to China may be hit. Top air carrier Korean Air Line slid 5.03 percent to 17,000 won and smaller rival Asiana Airlines fell 2.23 percent to 2,845 won.
Blue chips came under pressure, weighed down by more than 150 billion won ($129.5 million) worth of program-sales.
SK Telecom, South Korea's largest mobile carrier, fell just under one percent to 202,000 won as a Reuters survey showed the company's net profit for the quarter ended March was expected to drop 10 percent from a year ago to 402.9 billion won.
Samsung Electronics, Asia's most valuable technology stock, fell 1.73 percent to 626,000 won, while POSCO dipped 2.5 percent to 156,000 won.
Shares in Hynix Semiconductor Inc dropped 7.4 percent to 11,250 won after creditors voiced concerns about its plan to build a semiconductor plant in China, citing investment risks.
Hyundai Motor lost 5.85 percent to 46,700 won after newspapers reported the alliance between South Korea's leading auto maker and DaimlerChrysler AG was set to end.
Late last week, German supervisory board sources told Reuters DaimlerChrysler was considering selling its 10 percent stake, worth an estimated 850 million euros, in Hyundai.
Shares in South Korea's dominant cigarette maker KT&G inched down 0.4 percent to 26,600 won.
The chief executive of KT&G, Kwak Young-kyoon, told Reuters its first-quarter net profit had fallen from a year ago, hit by one-off costs such as bond valuation losses. He said operating profit was better than in 2003 thanks to strong sales of its low-tar premium brands.
On the main stock exchange, foreign investors bought a net 14 billion won worth of local shares.
Trade volume stood at 383 million shares on a turnover of 3.83 trillion won, against 477 million shares worth 3.23 trillion won on Friday. Decliners outnumbered advancers by 402 to 324 with 75 issues ending flat. The Kosdaq climbed 0.7 percent to 491.53 points.
The June KOSPI 200 futures index fell 2.1 points to 120.5 and the underlying KOSPI 200 spot index shed 2.14 points to 120.30.
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