Seoul shares fell 1.3 percent on Friday, marking the biggest fall in two weeks, led by exporters such as Samsung Electronics amid uncertainty over the US interest rate outlook and concern about oil and commodity prices.
Concerns that the main KOSPI index has risen too quickly, after setting record highs in three of the past four sessions, also hit recent outperformers such as steel maker POSCO Co Ltd.
However, shipbuilders gained, with Hyundai Heavy Industries Co rising 1.85 percent to 110,000 won on expectations for solid quarterly earnings. The world's biggest shipbuilder could report earnings as early as Monday.
Trading volumes remained light, with 253.2 million shares worth 3.7 trillion won changing hands as of 0640 GMT, the lowest daily volume since 252.3 million shares were exchanged on May 31, 2005.
The benchmark Korea Composite Stock Price Index (KOSPI) fell 1.33 percent to end at 1,445.20, marking its biggest one-day percentage decline since dropping 2.26 percent on April 28.
The main index still ended the week 0.29 percent higher, after hitting an all-time high of 1,464.70 on Thursday.
"There's quite a bit of uncertainty about the US interest rate outlook, and that's being worsened by rising oil and commodity prices," said Chang In-whan, chief executive and fund manager at KTB Asset Management.
Chang expects the index to be stuck between 1,400 points to 1,450 for the remainder of the month, but predicted gains would resume in June, with the KOSPI still up 4.8 percent for the year.
"My guess is that oil prices will not stay so high for long, and I think that eventually if the won currency stabilises, we'll see some gains," he added.
US stocks stumbled on Thursday, suffering their biggest drop in almost four months, as higher crude oil and gold prices stoked worries interest rates would rise in the United States, South Korea's second-biggest export market after China.
The Federal Reserve had raised interest rates for a 16th consecutive time on Wednesday, but left unclear whether it would pause in its credit tightening campaign.
South Korean exporters were hit, with Samsung Electronics Co Ltd, the world's biggest maker of memory chips, ending down 1.21 percent to 655,000 won.
Exporters have been under pressure this month, amid worries a strong South Korean won will dent profits from abroad.
LG Electronics Inc fell 1.18 percent to 75,200 won. Shares in the world's fourth-biggest mobile phone maker have dropped 15.8 percent so far this year amid deep concerns about mobile phone margins.
Major brokerages declined on concerns over falling trading volumes and a lack of fresh momentum to drive up the stock market further. Daewoo Securities Co fell 3.22 percent to 15,050 won.
POSCO, the world's fifth-biggest steel maker, lost 2.61 percent to 279,500 won after hitting a record 290,000 won on Thursday.
Decliners trumped gainers by 499 to 262 with 57 titles ending flat.
Foreign investors sold a net 99.1 billion won in shares on the main bourse as of 0640 GMT, while institutional investors sold a net 292.2 billion won. However, retail investors bought a net 334.7 billion won.
The June KOSPI 200 futures index dropped 4.30 points to 186.75, while the underlying KOSPI 200 spot index lost 2.93 points to 187.27.
South Korea's junior and tech heavy Kosdaq market fell 0.57 percent to finish at 686.01.