Seoul shares ended flat on Monday, as higher oil prices dented investment sentiment, while investors turned more cautious ahead of domestic unemployment and economic growth data and a US Fed policy setting meeting. A dip in the South Korean won boosted key exporters such as Hyundai Motor Co, while investors also chased steelmaker POSCO Co Ltd and other shares battered in last week's decline, analysts said. The benchmark Korea Composite Stock Price Index (KOSPI) ended 0.05 percent lower at 979.27.
"I wouldn't say higher oil prices had completely damaged sentiment, but it has certainly made investors reluctant," said Kim Dong-uk, an equity strategist at Daishin Securities.
"For now, the market will wait for the economic data and the US Fed meeting for direction," he added.
Oil was trading at $56.60 a barrel in Asia, $1 below the record $57.60 hit on Thursday.
The recent rally in US crude futures contributed to a 4.2 percent fall in the KOSPI last week that wiped off 23 trillion won ($22.98 billion) from the main index's market capitalisation, according to data by the Korea Exchange.
South Korea is the world's fourth-biggest buyer of crude oil and must import all of its crude needs, making it particularly vulnerable to oil price hikes.
"The biggest problem has not been the rise of oil prices itself but the pace at which they rose," said Chang In-hwan, chief executive and fund manager at KTB Asset Management.
"Once they stabilise, probably no later than April, local shares will resume their gains," he added.
Technology shares headed lower, weighed down by a dip in US peers on Friday. Samsung Electronics Co Ltd, the world's top maker of memory chips, fell 0.61 percent to close at 492,000 won.
Foreign investors sold a net 35 billion won ($34.98 million) in local shares, extending their selling streak to 13 sessions.
Investors were also trading cautiously ahead of a US Federal Reserve meeting on Tuesday amid widespread expectations for a 25 basis point increase in US interest rates.
South Korea is also set to report February unemployment data and fourth-quarter gross domestic product growth figures on the same day.
Among gainers, shares in SK Corp, South Korea's top oil refiner, rose 3.21 percent to end at 61,000 won amid hopes record-high oil prices would widen its profit margins.
Top local automaker Hyundai Motor rose 0.37 percent to 54,300 won and affiliate Kia Motors Corp gained 1.76 percent to 14,450 won, as the won's 0.4 percent dip versus the dollar eased concerns about lower earnings.
A stronger local currency weighs on exporters' earnings by making their products more expensive in overseas markets.
Bargain hunters also lifted steel makers and financial shares following their recent declines.
POSCO, the world's fifth-biggest steelmaker, ended up 2.64 percent at 214,000 won, while top local lender Kookmin Bank gained 1.51 percent to 47,000 won.
Trade volume reached 530 million shares worth 2.5 trillion won compared to 661.6 million shares worth 2.8 trillion won on Friday. Decliners edged out gainers by 472 to 278 with 49 titles ending flat.
Retail investors sold a net of 94.4 billion won, while institutional investors bought a net of 107.5 billion won.
The June KOSPI 200 futures index fell 0.65 point to 127.00, while the underlying KOSPI 200 spot index gained 0.02 point to 126.84.
The over-the-counter Kosdaq fell 0.44 percent to finish at 463.42.