The South Korean government said Monday that it will heighten monitoring of the local economy and financial market and if necessary, it will take action to fend off any fallout from the terrorist attacks in Paris that killed more than 120 people.

At least 129 people were reported dead on Friday (local time) following several separate terror attacks in and around the French capital, apparently committed by the Islamic State extremist group.

In a hastily arranged meeting, the finance ministry said the eurozone economy may contract to some extent in terms of consumption and trade due to the attacks, weighing heavily on the world economy and South Korea.

Europe is South Korea's third-largest trade partner, following China and the United States, with the trade volume reaching $114.1 billion in 2014.

The ministry said it will closely watch the local stock and currency markets, and take appropriate market-stabilizing measures as the volatility in the financial market will likely escalate, coupled with a possible rate hike in the U.S. and countermeasures by the Western countries.

It said it will make efforts to minimize the potential impact on local exporters and the tourism and aviation industries.

The Seoul market tumbled throughout the day, as the benchmark KOSPI plunged 1.53 percent to end at an almost two-month low and the Korean won fell sharply against the U.S. dollar on reduced appetite for risky assets.

The Financial Services Commission, the financial market governing body, and the Bank of Korea also held separate meetings to tackle any potential negative consequences of the Paris attacks.

"The Paris case is expected to have a short-term impact on the South Korean financial market," said an FSC official. "But we have to wait to see how the U.S. and France will respond and whether there will be another terrorist attack." (Yonhap)