Seoul stocks extended their losses to a fourth day on Tuesday on a slump in tech stocks as investors still remained wary of rate hikes in major economies and an economic slump. The Korean won rose against the US dollar.

After choppy trading, the benchmark Korea Composite Stock Price Index inched down 6.99 points, or 0.31 percent, to close at 2,218.68 points.

Trading volume was moderate at 403.6 million shares worth 6.03 trillion won ($4.7 billion). Losers outnumbered gainers 523 to 343.

Institutional investors sold a net 347.6 billion won, while retail and foreign investors bought a combined 317.4 billion won.

"The Kospi once fell below the 2,200-point mark but pared earlier losses amid a rally in the Chinese stock market," analyst Seo Sang-young from Mirae Asset Securities said.

Chinese stocks advanced on better-than-expected manufacturing data. The Shanghai Composite Index was up 0.94 percent and the Hang Seng Index in Hong Kong jumped over 2 percent as of 3:45 p.m.

"The Kospi was also buoyed by the semiconductor sector following news the Korean government plans to expand tax benefits to companies in the sector," Seo added.

Earlier in the day, the government announced it will expand tax incentives to strategic industries, such as chips, amid the heightening competition in the global market. It raised the tax credit for facility investment of chipmaking conglomerates from the current 8 percent to 15 percent.

In Seoul, most market heavyweights closed mixed.

Market bellwether Samsung Electronics inched down 0.18 percent to 55,400 won, while No. 2 chipmaker SK hynix declined 0.13 percent to 75,600 won.

Top automaker Hyundai Motor advanced 1.27 percent to 159,000 won, major chemical firm LG Chem fell 0.5 percent to 601,000 won, and messenger app operator Kakao added 1.14 percent to 53,300 won.

Hybe, the K-pop agency behind BTS, surged 4.13 percent to 176,500 won on the news of the latest single released by its girl group New Jeans.

The local currency closed at 1,271 won against the US dollar, up 1.6 won from the previous session's close. (Yonhap)