South Korean stocks closed 1.88 percent lower on Tuesday as investors had growing skepticism about the effectiveness of a new fiscal treaty for the European Union, analysts said. The local currency fell against the U.S. dollar.

The benchmark KOSPI fell 35.7 points to 1,864.06. Trading volume was moderate at 442.9 million shares worth 5.21 trillion won ($4.51 billion) with losers outpacing gainers 613 to 224.

“The Seoul market lost ground on concerns that EU summit results may be short of fundamentally resolving the eurozone debt crisis. Market players are awaiting more powerful steps like liquidity supply by the European Central Bank,” said Lim Soo-gyoon, a market analyst at Samsung Securities Co.

Lim said that the local market is likely to trade in a tight range this week as investors are looking for clues about the global economy by awaiting results of China’s annual economic policy meeting and the Federal Reserve’s policy decision.

China kicked off its three-day economic policy meeting on Monday, which market players are closely monitoring to gauge potential signs of China’s monetary easing stance.

Except for Britain, European leaders from 26 countries agreed on a plan on Friday to adopt tougher budget rules for fiscal integration, but global credit appraisers including Moody’s Investors Service said that the measures are not enough to tackle the region’s debt crisis, warning about the potential credit rating downgrades of the eurozone’s countries.

Foreign investors unloaded a net 204.2 billion won worth of local stocks on the main bourse.

Market leader Samsung Electronics fell 3.14 percent to 1,050,000 won and top banking group Woori Finance shed 2.24 percent to 9,580 won.

Leading card company Samsung Card declined 5.88 percent to 39,250 won after it said on Monday that it has decided to sell its 17 percent stake in Samsung Everland to KCC, a local maker of construction materials, for 773.9 billion won.

Analysts said the price tag for the stake sale was discounted by a larger-than-expected 15 percent from the book value, weighing on share prices of Samsung Card.

Carmakers were under selling pressure. Leading automaker Hyundai Motor lost 3.88 percent to 210,500 won and its affiliate Kia Motors fell 2.76 percent to 67,000 won.

U.S. stock markets closed lower on Monday on the eurozone risks. The Dow Jones industrial average shed 1.34 percent and the tech-laden Nasdaq composite index fell 1.31 percent.

The local currency closed at 1,154 won to the greenback, down 7.1 won from Monday’s close, as foreign investors unloaded local stocks, dealers said. 

(Yonhap News)