South Korean stocks fell for the third day in a row Thursday, as investors digested US Federal Reserve Chair Jerome Powell's hawkish remarks reaffirming more interest rate hikes ahead. The local currency dipped against the US dollar.

The benchmark Korea Composite Stock Price Index sank 14.17 points, or 0.55 percent, to close at 2,550.02. Trading volume was moderate at 591.9 million shares worth 8.65 trillion won ($6.56 billion), with decliners far outnumbering gainers 737 to 161.

"Before the July (Federal Open Market Committee), we're going to see constant volatility in the stock markets as the market deals with the uncertainty from the Fed policy," said Han Ji-young, an analyst at Kiwoom Securities Co.

Speaking at a European Central Bank forum in Portugal on Wednesday, Powell reiterated that the Fed will further raise its interest rates this year, and one could be carried out at the next monetary policy meeting set for July.

Powell said it's likely inflation won't come down to near the Fed's target of 2 percent this year or next.

Foreigners were in a selling mode for most of the session, before finishing the day with a net buying of 32.8 billion won.

Individual investors also scooped up a net 129.3 billion won, while institutions sold off a net 180.4 billion won.

Domestic-focused consumer staples were among those that dragged down the KOSPI, outweighing the gains by tech blue chips.

Noodle maker Nongshim fell 2.5 percent to 390,000 won, mainly led by its announcement of price cuts for some of its signature products, amid government calls for price adjustments given the decline in global wheat prices. Other food companies have followed suit.

Major confectionery maker Orion closed down 2.91 percent at 120,200 won, along with food manufacturer Ottogi losing 2.88 percent to 388,500 won.

Large-cap tech stocks closed in the green. Top battery maker LG Energy Solution rose 0.55 percent to 550,000 won, and its smaller rival Samsung SDI gained 1.22 percent to 665,000 won.

Chip giant SK hynix advanced 1.66 percent to 116,200 won.

Top-cap Samsung Electronics swerved in and out of positive territory before falling 0.41 percent to 72,400 won.

The local currency ended at 1,317.6 won against the US dollar, down 10.3 won from Wednesday's close. (Yonhap)