Korean stocks closed slightly lower Monday as investors sold shipbuilders and shipping companies on their grim business outlook. The local currency lost against the U.S. dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) ticked down 0.94 point, or 0.05 percent, to 2,014.55. 

Trade volume was moderate at 392.71 million shares worth 4.31 trillion won ($3.75 billion), with decliners outnumbering advancers 472 to 334.

Institutions offloaded companies in the heavy industry sector as they are set to carry out restructuring after posting poor first-quarter earnings. Offshore investors remained net sellers ahead of a policy meeting of the U.S. Federal Reserve later this week, which is expected to refrain from interest rate hikes.

A slew of earnings reports are due this week from big names, including tech giant Samsung Electronics and top automaker Hyundai Motor.

"Following last week's rally on better-than-expected earnings, local shares are going through price corrections as investors locked in profits," said Bae Sung-young, an analyst at Hyundai Securities. "As the government is set to raise pressure on money-losing shipbuilding and merchant shipping companies, it is expected to dent the steelmaking industry as well."

Shipbuilders dragged the main index down after industry leaders posted sluggish first-quarter earnings amid a protracted global slump.

Top shipbuilder Hyundai Heavy Industries sank 5.17 percent to 110,000 won, and Samsung Heavy Industries declined 6.52 percent to 10,750 won.

No. 1 steelmaker POSCO dropped 4.62 percent to 237,500 won as investors tried to cash in from previous gains.

Hanjin Shipping, the nation's largest shipping firm, tumbled by the daily limit of 30 percent to 1,825 won, as it was set to apply for self-rescue measures later this day due to worsening finances.

The news of its self-rescue plan drove its affiliates up on optimism of a reduced financial burden.

Hanjin Kal, its holding company, jumped 7.89 percent to 20,500 won, and Korean Air, the nation's largest airline and Hanjin's flagship unit, climbed 2.3 percent to 29,750 won.

In contrast, construction shares advanced on hopes for big development deals in Iran during President Park Geun-hye's visit to the Middle Eastern nation in early May.

Hyundai Engineering & Construction rose 2.41 percent to 40,400 won, and Daelim Industrial gained 0.57 percent to 88,700 won.

Korea's won closed at 1,147.8 against the greenback, down 4.7 won from Friday's close. (Yonhap)