The drop came after the Dow Jones industrial average backtracked 2.21 percent, and the tech-savvy Nasdaq Composite shed 1.7 percent overnight.

Analysts said Seoul shares also closed lower as investors were concerned about the escalating trade dispute between Washington and Beijing, along with a generally gloomy outlook over the global economy.

"The US stock market closed weaker on the performance uncertainties of retailers coupled with a sharp decrease in international oil prices," said Lee Kyung-min, a researcher at Daishin Securities Co.

Foreigners were net sellers for the seventh consecutive session by offloading 390 billion won. Retail investors bought a net 71.7 billion won, and institutions scooped up a net 326 billion won.

Oil refiners closed bearish on falling crude prices, with S-Oil losing 2.21 percent to 110,500 won and SK Innovation decreasing 0.49 percent to 203,500 won.

Financial firms closed down, with KB Financial falling 0.85 percent to 46,550 won and Samsung Life Insurance slipping 0.77 percent to 90,000 won.

Tech shares traded mixed, with market behemoth Samsung Electronics dropping 1.64 percent to 42,100 won, while No. 2 chipmaker SK hynix gained 0.89 percent to 68,100 won.

No. 1 steelmaker POSCO fell 1.93 percent to 254,500 won, while Korea Zinc gained 0.91 percent to 442,000 won. Hyundai Steel climbed 1.38 percent to 44,200 won.

Foodstuff makers closed higher, with Orion rising 7.28 percent to 110,500 won and Ottogi advancing 0.55 percent to 727,000 won.

The South Korean currency closed at 1,131.60 won against the US dollar, down 5.80 won from the previous session. (Yonhap)