Stocks drop as investors flee to safety on Russia news

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 2,706.79 points on Tuesday, down 37.01 points, or 1.35 percent, from the previous trading day. [YONHAP]

Stocks retreated Tuesday as Russia ordered forces into breakaway regions in Ukraine. The won fell against the dollar.

The benchmark Kospi lost 37.01 points, or 1.35 percent, to close at 2,706.79 points.

Trading volume was moderate at about 639 million shares worth some 10.4 trillion won ($8.7 billion), with losers outnumbering gainers 778 to 101.

Institutions sold a net 381 billion won and foreigners offloaded 330 billion won, while retail investors bought 670 billion won.

Investors dumped stocks following reports that Russian was dispatching what it called "peacekeeping forces" to eastern Ukraine.

Investors are closely watching the situation in Ukraine. The Ukraine incident pushed up oil prices, while sapping demand for risky assets, including stocks and cryptocurrencies.

"At the moment, [the Ukraine risk] may turn out into something larger than mere noise. It also may affect the inflation rates," Daeshin Securities analyst Lee Kyung-min said.

Most large caps closed lower in Seoul.

Samsung Electronics decreased 1.08 percent to 73,400 won, and chipmaker SK hynix shed 1.15 percent to 128,500 won.

Naver declined 1.57 percent to 313,000 won, and Kakao declined 1.5 percent to 91,800 won.

Chemical firm LG Chem dipped 4.22 percent to 590,000 won, while battery maker SK Innovation declined 3.6 percent to 201,000 won.

Carmaker Hyundai Motor lost 1.89 percent to 181,500 won, with Kia decreasing 1.52 percent to 77,700 won.

Pharmaceutical company Celltrion inched up 0.93 percent to 163,000 won, and Samsung Biologics gained 1.04 percent to 775,000 won. SK Bioscience dropped 2.98 percent to 146,500 won.

The local currency closed at 1,192.7 won against the dollar, up 0.6 won from the previous session's close.

The Kosdaq declined 16.14 points, or 1.83 percent, to close at 868.11 points.

Bond prices, which move inversely to yields, closed higher. The yield on three-year government bonds lost 4.1 basis points to 2.327 percent.

BY SHIN HA-NEE, YONHAP [shin.hanee@joongang.co.kr]