Stocks dip over 1 percent Monday amid concerns of another sharp rate hike by Fed

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 2,355.66 points on Monday, down 27.12 points, or 1.14 percent, from the previous trading day. [YONHAP]

Stocks dipped by more than 1 percent on Monday, extending their losing streak to a fourth day as market sentiment was dampened by the prospect of another sharp rate hike this week by the U.S. Fed.

After opening higher, the benchmark Kospi shed 27.12 points, or 1.14 percent, to 2,355.66, marking the lowest since July 12 when the corresponding reading was 2,330.98.

Trading volume was light at 395.3 million shares worth 6.7 trillion won ($4.8 billion) with losers outpacing gainers 749 to 143.

The U.S. Fed is set to hold a two-day policy meeting on Tuesday.

"As the aftermath of the August U.S. CPI (consumer price index) persists, investors are wary that the Fed could deliver a sharper-than-expected rate hike this week," said Jeong Tae-hyun, an analyst at Cape Investment and Securities.

Some experts predict that the Fed may jack up its base rate by up to a full percentage point, sharper than the earlier expected 75-basis point.

Foreigners sold a net 300 million won worth of stocks, while institutions sold a net 41.7 billion won. Retail investors purchased a net 27.5 billion won.

In Seoul, Samsung Electronics gained 0.36 percent at 56,400 won, while SK hynix shed 1.32 percent to 90,000 won.

Naver inched down 0.91 percent to 218,000 won and Kakao retreated 2.24 percent to 65,400 won.

Auto shares were mixed, with Hyundai Motor adding 0.25 percent to 201,500 won, while its affiliate, Kia, stepped down 0.37 percent to 80,800 won.

State-run utility Korea Electric Power Corporation advanced 3.17 percent to reach 19,500 won buoyed by anticipation that the government could raise the electricity rate by a big margin next month.

The local currency continued to remain weak, closing at 1,393.6 won against the dollar, up 5.6 won from the previous session's close.

The Kosdaq lost 18.13 points, or 2.35 percent, to close at 751.91 points.

Bond prices, which move inversely to yields, closed mixed. The yield on three-year government bonds lost 0.7 basis points to 3.758 percent, and the yield on the 10-year government bond advanced 2.7 basis points to 3.799 percent.

BY CHO JUNG-WOO, YONHAP [cho.jungwoo1@joongang.co.kr]