South Korean stocks fell to the lowest level in four weeks Thursday as a sharp rise in German government bond yields is feared to trigger a sell-off in the local equity market, analysts said. The local currency lost ground against the U.S. dollar.

The Korea Composite Stock Price Index closed down 13.58 points, or 0.65 percent, to 2,091.00, the lowest level since April 10, when the index finished at 2,087.76.

Trading volume was moderate at 419.5 million shares worth 5.38 trillion won ($4.93 billion) with decliners outpacing gainers 437 to 363.

Analysts said a hike in German bond yields could prompt the yields of other government bonds to rise steeply, adding volatility to global liquidity conditions.

"The yield hike reflects the end of a global easy-money policy, led by the U.S. Federal Reserve. This could lead to an asset sell-off in other emerging countries," said Chun Jeong-hoon, an analyst at Kiwoom Securities Co.

He said that whether foreigners will stay in the local stock market will depend on the result of U.S. job market figures to be released on Friday (U.S. time), and the outcome of the European finance ministers' meeting that is expected to deliver a progress report on the Greek debt problems.

Foreigners dumped more shares than they bought on the Seoul bourse with a net 72.8 billion won. This is their largest sell-off since March 27. Institutions also unloaded a net 102.5 billion won, while individuals scooped up a net 168.5 billion won.

Shares fell across the board, with telecom companies and banks leading the decline. Top mobile carrier SK Telecom dropped 3.31 percent to 262,500 won, with state-run Industrial Bank of Korea retreating 3.24 percent to 14,950 won.

Shares of Cheil Industries, a key unit of Samsung Group, plunged 10.66 percent to 142,500 won on a media report that Samsung does not have a plan to transform it into the group's holding company.

The group's food and clothing arm has been predicted to emerge as the holding firm if Samsung sets out for a groupwide overhaul.

The local currency fell to its lowest level in almost two months, closing at 1,089.70 won against the greenback, down 9.7 won from the previous session's close.

Bond prices, which move inversely to yields, closed mixed. The yield on three-year Treasurys inched down 0.3 basis point to 1.966 percent, while the return on the benchmark five-year government bonds gained 1.7 basis points to 2.214 percent. (Yonhap)