South Korean stocks tumbled more than 1 percent Monday led by sharp losses in semiconductor and tech shares ahead of a US rate-setting meeting. The local currency gained ground against the dollar.

The benchmark Korea Composite Stock Price Index lost 26.56 points, or 1.02 percent, to finish at 2,574.72, erasing the previous session's 1.1 percent jump.

Trading volume was moderate at 408.4 million shares worth 8.6 trillion won ($6.5 billion), with decliners outpacing winners 548 to 330.

Offshore investors sold a net 366.6 billion won worth of local shares, while individuals scooped up a net 391.9 billion won.

"A rise in US government bond rates, a drop in chip shares and foreign selling weighed heavily on the Korean stock market," said Kim Seok-hwan, an analyst from Mirae Asset Securities.

"In particular, Kospi extended its losses due to a slump in shares like Samsung Electronics and SK hynix."

Samsung Electronics, one of the world's biggest chipmakers, tumbled 2.5 percent to 70,200 won and its chipmaking rival SK hynix sank 2.78 percent to 119,000 won.

Top online portal operator Naver slid 3.49 percent to 221,500 won and Kakao declined 0.51 percent to 48,600 won.

Leading battery maker LG Energy and Solution fell 1.36 percent to 507,000 won and Samsung SDI dropped 2.41 percent to 567,000 won.

Shipbuilders were also among the losers, with HD Korea Shipbuilding & Offshore Engineering decreasing 1.14 percent to 121,000 won and Samsung Heavy Industries retreating 0.59 percent to 8,490 won.

But top oil refinery SK Innovation jumped 3.13 percent to 164,600 won as global ratings agency S&P has raised the company's credit rating by one notch for its favorable capital increase.

Retail shares were also in positive territory, with Hotel Shilla, the hotel operating unit under Samsung Group, rising 2.27 percent to 90,100 won and Shinsegae, a leading department store operator, gaining 0.24 percent to 212,500 won.

The Korean won ended at 1,324.4 won against the dollar, up 1.5 won from Friday's close. (Yonhap)