South Korea's KOSPI stock index tracked Asian peers lower on Tuesday, with investor sentiment taking a hit as China expressed anger after a US Navy destroyer sailed near islands claimed by China in the disputed South China Sea.
The Korean won weakened and bond yields also fell.
While South Korea's unemployment rate hit an eight-year high in August as mandatory minimum wages rose, the finance minister warned on Tuesday of the country posting employment losses in September in annual terms, after a small addition of 3,000 jobs in August.
At 06:32 GMT, the KOSPI ended down 29.31 points or 1.25 per cent at 2,309.57, marking its biggest per centage loss since August 13.
South Korean chipmakers Samsung Electronics and SK Hynix closed 1.4 per cent and 2.7 per cent lower, respectively; analysts expect Samsung Electronics to mark a peak in earnings as a two-year super cycle of tight supply and soaring demand comes to an end.
The won was quoted at 1,119.2 per dollar on the onshore settlement platform, 0.66 per cent weaker than its previous close at 1,111.8, extending loss into a second day.
In offshore trading, the won was quoted at 1,118.7 per US dollar, down 0.53 per cent from the previous day, while in one-year non-deliverable forwards it was being asked at 1,101.7 per dollar.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 1.52 per cent after US stocks ended the previous session with mild gains. Japanese stocks rose 0.1 per cent.
The KOSPI is down around 5.2 per cent so far this year, and up by 3.54 per cent in the previous 30 days.
The current price-to-earnings ratio is 12.10, the dividend yield is 1.28 per cent and the market capitalisation is 1,242.04 trillion won.
The trading volume during the session on the KOSPI index was 281,425,000 shares, and of the total traded issues of 899, the number of advancing shares was 193.
Foreigners were net sellers of 243,941 million won worth of shares.
The US dollar has risen 4.94 per cent against the won this year. The won's high for the year is 1,053.55 per dollar on April 2 2018 and low is 1,140.4 on July 19 2018.
In money and debt markets, December futures on three-year treasury bonds rose 0.04 points to 108.37.
The Korean 3-month Certificate of Deposit benchmark rate was quoted at 1.65 per cent, while the benchmark 3-year Korean treasury bond yielded 2.011 per cent, lower than the previous day's 2.02 per cent.
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