Korean shares closed lower Thursday as a drop in global oil prices and fears of a possible U.S. rate hike down the road spooked investors. The local currency further lost ground against the U.S. dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) lost 9.15 points, or 0.46 percent, to 1,985.97. Trading volume was slim at 336.2 million shares, with losers greatly outnumbering winners 510 to 289.


The index opened lower following overnight losses on Wall Street, which was prompted by reports that U.S. oil reserves surged at a faster rate than earlier market expectations last week, causing global oil prices to drop.

The price of Dubai crude, Korea's benchmark, slipped to $37.14 per barrel on Wednesday, down $0.29 per barrel from the previous day.

Investor sentiments further worsened after ranking U.S. Federal Reserve officials hinted at a possible rate hike in April.

"A cut in oil prices undoubtedly affects newly emerging markets such as ours. Still, foreign investors do not appear to be in a hurry to exit the local market," Kiwoom Securities economist Seo Sang-young said.

Seo noted a more imminent U.S. rate hike in April may cause foreign investors to reduce exposure to local stocks down the road.

Foreigners remained net buyers for the 11th consecutive session, purchasing a net 47.9 billion won ($41 million), with individual investors also scooping up a net 57.4 billion won. Institutional investors offloaded a net 173.8 billion won.

Large caps traded mixed.

Market bellwether Samsung Electronics added 0.23 percent to 1,282,000 won, while top automaker Hyundai Motor plunged 1.58 percent to 155,500 won.

Cosmetics giant AmorePacific advanced 1.70 percent to 388,000 won, with its smaller rival LG Chem spiking 2.74 percent to 318,500 won.

Global steelmaker POSCO tumbled 2.56 percent to 209,000 won.

The local currency closed at 1,166.30 won against the U.S. dollar, down 5.10 won from Wednesday's close.

Bond prices, which move inversely to yields, closed higher. The yields on three-year Treasury notes slipped 1.2 basis points to 1.500 percent while the return on the benchmark five-year government bond also shed 1.2 basis points to 1.608 percent. (Yonhap)