Seoul shares closed a touch lower on Tuesday, as investors steered clear of risky stock purchases ahead of a central bank rate setting meeting and the expiry of derivatives later in the week.
"Investors were looking for clues on the market's near-term course, trying to gauge the impact from the upcoming 'triple witching day' and the central bank's meeting," said Cho Sung-joon, a strategist at Meritz Securities.
September futures contracts and options on index and stocks are set to expire on Thursday.
"I believe the market's upward momentum is still intact and that it will take off after a few days of consolidation," Cho added.
The benchmark Korea Composite Stock Price Index (KOSPI) ended 0.66 percent lower at 818.80.
Investors were reluctant to stake out sizeable positions ahead of the Bank of Korea's monetary policy meeting due on Thursday. Recent talk of further interest rate cuts has cooled recently amid strong inflation data and government measures to boost weak domestic spending, brokers said.
A lack of fresh leads from the United States also kept trading sparse. US markets were closed on Monday for the Labour Day holiday.
Among the day's leading losers, shares in flat screen maker Samsung SDI shed 3.46 percent to end at 111,500 won on lingering concerns about a supply glut and weaker prices.
Domestic demand-focused shares such as department store chains also ended lower, hit by profit-taking after recent gains sparked by government economic stimulus measures.
Shares in Hyundai Department Store, South Korea's second-biggest department store chain after unlisted Lotte Shopping, fell 2.8 percent to end at 35,950 won.
Banking issues also gave ground, with top lender Kookmin Bank sliding 1.01 percent to end at 39,150 won and fourth-ranked Hana Bank shedding 1.8 percent to 27,300 won.
Shares in Woori Financial Group, the country's third-largest lender, fell 1.17 percent to 7,630 won after an online news provider reported the government, its biggest shareholder, planned to sell between 6-7 percent of its Woori holdings via a block sale. Shares in POSCO Co, the world's fifth-biggest steel maker, ended down 0.29 percent at 171,000 won despite hopes for further steel price increases.
On an upward tilt, shares in Hyundai Heavy Industry Co ended 4 percent higher at 27,350 won on hopes the world's largest shipbuilder may clinch a number of lucrative liquefied natural gas (LNG) carrier orders.
Foreign investors bought a net 6.8 billion won ($5.90 million) in shares and retail investors a net 3.8 billion won. Institutional investors sold a net 15.1 billion won worth of stocks.
Volume stood at 433.7 million shares valued at 1.6 trillion won. Losers beat winners by 397 to 310, with 96 issues closing unchanged.
The September KOSPI 200 futures index declined 0.50 point to 105.10 and the underlying KOSPI 200 spot index lost 0.55 point to 104.97.
The junior KOSDAQ market fell 0.40 percent to 366.69.