Seoul shares had their biggest one-day percentage fall in more than six weeks on Wednesday after an earnings outlook from LG.Philips LCD triggered a heavy technology sector sell-off and to doubts about stock valuations.
POSCO fell 1.58 percent to 217,5000 won, with investors worried about slowing profit momentum, a day after the world's fifth-biggest steel maker reported its weakest quarterly profit growth in three years.
The benchmark Korea Composite Stock Price Index (KOSPI) closed down 2.19 percent to end at 1,217.06, its biggest one-day percentage fall since dropping 2.2 percent on August 29.
"People have lost confidence in the IT sector," said Kim Yung-min, equity strategist at Korea Investment Trust Management. "The problem is that people are no longer certain of a recovery in earnings in the fourth quarter."
Shares in LG.Philips LCD Co Ltd, the world's second-biggest flat panel maker, dropped 7.79 percent to end at 41,450 won after it forecast LCD screen prices would stay weak until the end of the year, raising worries over its outlook.
Samsung Electronics, fell 3.51 percent to 578,000 won, ahead of its quarterly earnings due on Friday.
Hynix Semiconductor Inc, fell 2.32 percent to 23,200 won, a day before the release of its quarterly results. Kookmin Bank, lost 3.2 percent to 60,500 won, while brokerage Woori Investment and Securities Co dropped 3 percent to 42,100 won.
Trade volume reached around 600 million shares worth 4.6 trillion won compared with 504 million shares worth 3.7 trillion won on Tuesday. Decliners edged out gainers by 466 to 300 with 57 titles ending flat.
Foreign investors sold a net 44 billion won in shares on the main bourse, data at 0640 GMT showed. Retail investors bought a net 226.9 billion won, while institutional investors sold a net 172.7 billion won.
The December KOSPI 200 futures index fell 4.40 points to 156.10 and the underlying KOSPI 200 spot index declined 3.73 points to 156.33.
South Korea's junior and tech-heavy Kosdaq market fell 0.53 percent to finish at 606.32.