S.Korean shares fall on expected U.S. rate hike

South Korean shares ended in a negative territory on Wednesday as expectations re-emerged for the U.S. Federal Reserve's interest rate hike as early as in September.

The benchmark Korea Composite Stock Price Index (KOSPI) shed 4.01 points, or 0.20 percent, to settle at 2,043.75. Trading volume stood at 387.57 million shares worth 4.31 trillion won (3.89 billion U.S. dollars).

Worries resurfaced about the Fed's rate hike next month as New York Federal Reserve President William Dudley said overnight that a September rate hike is possible as the U.S. central bank predicted some acceleration in the growth outlook.

Dudley said the U.S. economy is edging closer towards the point in time where it would be appropriate to raise interest rates further, adding that the U.S. labor market continues to generate reasonable job gains.

Atlanta Federal Reserve President Dennis Lockhart also forecast that at least one rate hike may be needed in 2016.

U.S. stocks, which had kept a record-breaking trend, declined overnight on the back of the expected Fed rate hike, discouraging investors here from buying stocks.

Local financial institutions reduced stock holdings by 87 billion won, pulling down the main stock gauge. Retail and foreign investors bought stocks worth 44 billion won and 14 billion each, limiting the KOSPI's further slump.

Large-cap shares ended mixed. Market bellwether Samsung Electronics lost 0.3 percent, and the state-run power supplier Korea Electric Power Corp. retreated 0.9 percent. Samsung C&T, de-facto holding company of South Korea's largest conglomerate Samsung Group, slumped 1.4 percent.

Top steelmaker POSCO shed 0.7 percent, but the biggest automaker Hyundai Motor gained 1.5 percent. The No.1 life insurer Samsung Life Insurance advanced 2.5 percent.

The tech-savvy KOSDAQ lost 5.20 points, or 0.74 percent, to 693.76 at the close. It followed both foreign and institutional investors turning into net sellers in the market.

South Korea's currency finished at 1,108.3 won against the greenback, down 16.1 won from Tuesday's close.

Bond prices ended lower. Yields on the liquid three-year treasury notes rose 1.4 basis points to 1.233 percent, and returns on the benchmark 10-year government bonds gained 3.9 basis point to 1.434 percent. Enditem