The local stock market opened lower on news that China had banned trips to South Korea in what could be another economic retaliation in protest over Seoul's moves to deploy the defense system, called THAAD, on its soil.

Seoul and Washington repeatedly said that the system is aimed at deterring North Korean provocations, while China has expressed strong hostility toward the decision, saying it will be used to spy on its own military developments.

Also, overnight losses on Wall Street, triggered by growing speculation over a March rate hike, helped dampen market sentiment.

"China-exposed stocks, for instance, cosmetics and entertainment companies, will have to brace for rough sailing down the road," said Kim Young-ok, an analyst at KTB Investment & Securities.

Top cap Samsung Electronics ended at 1,981,000 won, down 0.25 percent from the previous session's close. Samsung C&T, the de facto holding firm for Samsung Group, remained flat at 121,500 won.

Hyundai Motor, the country's leading automaker, shed 4.38 percent to end at 142,000 won, and its smaller affiliate Kia Motors fell 1.62 percent to finish at 36,500 won.

Other market heavyweights also remained in negative terrain.

POSCO, the leading steelmaker, moved down 1.37 percent to end at 287,500 won, and SK hynix, a major chipmaker, dipped 1.26 percent to 47,100 won.

AmorePacific, the country's No. 1 cosmetics maker, dropped 12.67 percent to end at 251,500 won.

Lotte Group affiliates also continued to lose ground after Lotte International Co. agreed to hand over a golf course in the southeastern rural city of Seongju for the installment of the THAAD battery.

Lotte Shopping shed 0.93 percent to end at 212,000 won.

In contrast, some defensive stocks closed higher, with top mobile carrier SK Telecom rising 1.53 percent to end at 233,000 won.

Hyundai Heavy Industries, a major shipyard here, advanced 1.21 percent to 167,500 won on hopes for a recovery in its earnings.

The local currency closed at 1,156.10 won against the US dollar, down 14.5 won from the previous session's close.

Bond prices, which move inversely to yields, closed mixed. The yield on three-year Treasurys remained flat at 1.713 percent while the return on the benchmark five-year government bond shed 0.1 basis point at 1.912 percent. (Yonhap)