The benchmark Korea Composite Stock Price Index fell 11.20 points, or 0.58 percent, to 1,927.17. Trading volume was moderate at 413 million shares worth 4.18 trillion won ($3.4 billion), with losers outnumbering gainers 644 to 203.

The index dropped to as low as 1,911.72 at one point in the morning session but pared part of its earlier losses.

Retail investors bought a net 56 billion won worth of shares, while institutions scooped up a net 14.3 billion won. Foreigners offloaded a net 93.8 billion won.

"Concerns over a global economic slowdown is gripping the market," said Lee Young-gon, an analyst at Hana Financial Investment. "Investors are also worried that the intensifying US-China trade war would further damage the global economy."

US stock markets suffered a 3 percent plunge Wednesday on fears of a recession after the 10-year yield fell below the two-year yield, although they made a slight recovery the following day on better-than-expected US consumer spending data.

In the latest salvo between the world's two largest economies, China said it would retaliate against the United States if Washington slaps tariffs on its products next month. US President Donald Trump said Thursday (local time) he believes the trade war with China will be "fairly short," saying, "The longer the trade war goes on, the weaker China gets and the stronger we get."

Large-cap stocks closed mixed on the Seoul bourse. 

Market bellwether Samsung Electronics rose 0.46 percent to 43,900 won, but No. 2 chipmaker SK hynix dropped 0.65 percent to 76,400 won.

No. 1 automaker Hyundai Motor gained 0.39 percent to 128,000 won, while its sister company Kia Motors slid 0.11 percent to 43,600 won. Auto parts maker Hyundai Mobis fell 0.21 percent to 239,500 won.

POSCO, South Korea's top steelmaker, declined 0.49 percent to 205,000 won. LG Chem, the nation's largest chemical company, dived 1.08 percent to 320,000 won.

The local currency closed at 1,210.80 won against the US dollar, up 1.9 won from the previous session's close. (Yonhap)