Seoul shares ended lower on Monday, marking a fourth consecutive session of losses, hit by high oil prices and as exporters such as LG.Philips LCD fell after strong US jobs data raised concerns about higher US interest rates. But Hyundai Motor Co gained 3.59 percent to 72,100 won after Standard & Poor's Ratings Services placed the car maker's debt ratings on watch for a possible upgrade.
The benchmark Korea Composite Stock Price Index (KOSPI) fell 0.25 percent to end at 1,086.64.
"There are concerns US interest rates will continue to rise, while oil prices are also high," said Kim Hyun-tae, a fund manager at Landmark Investment Management.
"We'll see narrow range trading until the Fed meets, and it's possible to see a short-term correction with the market hitting as low as 1,070."
South Korean shares suffered their biggest one-day loss in over three months on Friday, dropping 1.98 percent.
US stocks also fell on Friday amid inflation fears after July US employment data exceeded expectations, with hourly wages rising the most in a year.
The data came ahead of the Fed's policy-setting meeting on Tuesday, which is widely expected to result in another quarter percentage point hike in US interest rates.
"The most ideal outcome would be for the Fed to signal some kind of end to its interest rate increases," said Hwang Chang-jung, an analyst at Woori Investment and Securities.
Exporters were among the day's main decliners, with LG.Philips LCD Co Ltd, the world's second-biggest flat panel maker, ending down 2.32 percent to 48,400 won.
Samsung Electronics Co Ltd, the world's top maker of memory chips, fell 0.36 percent to 551,000 won.
Local shares were also under pressure after crude oil hit a record high in Asia trade, raising concerns about the impact of higher energy prices on corporate profits. Oil was trading at $62.90 a barrel.
Hanjin Shipping Co dropped 8.45 percent to 25,450 won after it said late on Friday its net profit plunged 53.7 percent in the second quarter from a year earlier.
Asiana Airlines Inc, South Korea's second-biggest airline, fell 4.25 percent to 4,730 won, as a strike by unionised pilots entered its 23rd day.
But LG Card Co Ltd rose 2.4 percent to 34,200 won after the Korea Economic Daily newspaper reported creditors could begin steps to sell South Korea's biggest card issuer as early as this month.
Some domestic demand-focused stocks also rose as investors viewed them less vulnerable to external uncertainties. Kookmin Bank, South Korea's biggest lender, gained 0.77 percent to finish at 52,500 won.
KT&G Corp, the country's top cigarette maker, rose 2.59 percent to 41,650 won.
Trade volume reached 388.4 million shares worth 2.3 trillion won compared to 556.9 million shares worth 3.1 trillion won on Friday. Losers edged out gainers by 460 to 277 with 69 titles ending flat.
Foreign investors sold a net 84.9 billion won in shares on the main bourse, while retail investors sold a net 0 billion won. Institutional investors bought a net 63.4 billion won.
The September KOSPI 200 futures index edged up 0.10 point to 140.20 and the underlying KOSPI 200 spot index fell 0.21 point to 140.49.
South Korea's junior and tech heavy Kosdaq market fell for a seventh consecutive session, ending down 0.90 percent to finish at 507.38.