Stocks fall as election looms near

Stocks closed lower as investors turned cautious ahead of the April 10 parliamentary elections and upcoming release of U.S. inflation data. The won fell against the dollar.

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 2,705.16 points on Tuesday, down 0.46 percent, or 12.49 points, from the previous trading session. [NEWS1]

Stocks ended lower Tuesday as investors grew more cautious ahead of the April 10 parliamentary elections and the release of key U.S. inflation data later this week. The won fell against the dollar.

The Kospi lost 12.49 points, or 0.46 percent, to close at 2,705.16.

Trade volume was moderate at 458.4 million shares worth 9.48 trillion won ($6.99 billion), with decliners outpacing gainers 489 to 370.

Institutions bought stocks worth 124.9 billion won, while foreigners and retail investors unloaded shares worth 134.2 billion won and 13.5 billion won, respectively.

Overnight, major U.S. indexes closed almost flat as investors awaited the release of the March consumer price index (CPI) report, a key measure of inflation, later this week.

Investors' eyes are also on the results of Korea's parliamentary elections set to be held Wednesday.

“Investors' preference for risky assets decreased on increasing pressure from U.S. rate cuts getting delayed and ahead of the release of the March CPI,” said Lee Kyoung-min, an analyst at Daishin Securities.

“Foreign investors, who have purchased a record-high amount of Korean shares recently, also turned to selling mode, bringing negative impact on the Korean stock market,” he added.

Last week, a U.S. monthly jobs report showed that the world's largest economy had posted its biggest job growth in almost a year in March, raising expectations that the Federal Reserve may keep interest rates elevated for longer.

In Seoul, Samsung Electronics dipped 1.07 percent to 83,600 won while SK hynix climbed 0.94 percent to 182,900 won.

LG Energy Solution rose 0.27 percent to 374,000 won, but Samsung SDI and Posco Future M dropped 2.14 percent and 0.53 percent to 411,000 won and 280,000 won, respectively.

Auto and bio shares lost ground.

Hyundai Motor retreated 1.94 percent to 228,000 won, and Kia dropped 0.46 percent to 108,000 won.

Samsung Biologics decreased 1.23 percent to 805,000 won, and Celltrion slid 3.82 percent to 181,300 won.

The local currency ended at 1,354.90 won against the greenback, up 1.70 won from the previous session's close.

The Kosdaq fell 1.24 points, or 0.14 percent, to close at 859.33.

Bond prices, which move inversely to yields, closed lower. The yield on three-year government bonds rose 0.4 basis points to 3.390 percent, and the return on the benchmark U.S. 10-year government bonds climbed 2.4 basis points to 4.426 percent.

BY KIM JI-YE, YONHAP [kim.jiye@joongang.co.kr]