Technology shares were among the leading losers amid fears that the stronger South Korean won would dampen their exports.
Hynix Semiconductor Inc fell 6.17 percent to 15,200 won, while Samsung Electronics Co Ltd, the world's leading maker of memory chips, shed 1.14 percent to close at 522,000 won. Shares in several LG units surrendered part of the strong gains seen on Monday. Affiliates of South Korea's No 2 conglomerate had been boosted after Dubai-based Sovereign said it had built up a 5.70 percent stake in LG Electronics and a 5.46 percent stake in LG Corp.
LG Electronics Inc, the world's top maker of air conditioners, fell 2.24 percent to end at 78,500 won after rising 7.1 percent on Monday, while LG Telecom Co Ltd, South Korea's smallest mobile operator, fell 3.72 percent to 4,400 won.
LG Group holding company LG Corp reversed early losses to end 0.17 percent higher at 29,000 won.
Shares in Dacom Corp rose 2.14 percent to 7,620 won on talk Sovereign would push the LG Group to sell its controlling stake in the No 2 local fixed-line provider amid murky earnings prospects.
Trade volume reached 631 million shares worth 3.7 trillion won compared to 628 million shares worth 4.5 trillion won on Monday. Losers edged out gainers by 529 to 233 with 51 titles ending flat.
The March KOSPI 200 futures index fell 1.30 points to 126.30 and the underlying KOSPI 200 spot index dropped 1.35 points to 126.74. The over-the-counter Kosdaq fell 2.71 percent to finish at 494.83.