South Korean shares fell Monday as investors were nervous about the impact of the U.S. financial bailout plan and a weaker won.

The benchmark Korea Composite Stock Price Index (KOSPI) fell 19.97 points, or 1.35 percent, to 1,456.36. Volume was thin at 344.17 million shares worth 4.9 trillion won ($4.13 billion), with losers outpacing gainers 518 to 273.

"The biggest U.S. bailout plan in history to purchase distressed debts failed to enliven investor confidence over the local financial market," Kim Seung-han, an analyst at CJ Investment and Securities, was quoted as saying by Yonhap News. "Investors will wait and see how the rescue will work on the local economy, where a falling won is aggravating sentiment."

U.S. lawmakers are poised to vote Monday (local time) on the government's $700 billion proposal to buy home mortgage-related assets in a bid to rescue the teetering financial sector after congressional leaders reached a tentative deal early Sunday.

The won fell sharply against the U.S. dollar, despite financial authorities' verbal intervention. The local currency finished at 1,188.8 won to the dollar, down 28.3 won from Friday's close.

The passage of the U.S. bailout plan sent the dollar further upward while pushing the won down, dealers said.

Steel makers and shipbuilders were the biggest drags on the market. Top steel maker POSCO fell 1.84 percent to 454,000 won. Top shipbuilder Hyundai Heavy Industries lost 3.73 percent to 271,000 won and Hanjin Heavy Industries & Construction tumbled 8.27 percent to 33,850 won.

Most large-cap shares traded sharply lower, with market leader Samsung Electronics falling 1.63 percent to 544,000 won. Home-appliance maker LG Electronics shed 2.3 percent to end at 106,000 won.

Hanwha, meanwhile, gained 1.4 percent to 43,350 won on a report that the state-run Korea Deposit Insurance Corp. plans to sell its 16-percent stake in Korea Life Insurance to Hanwha Group. The possible stake transfer would raise Hanwha's stake in Korea Life to 67 percent, giving the nation's conglomerate full control of the insurer.

Telecom shares also managed to stay in positive terrain. Dominant carrier SK Telecom gained 3.19 percent to 210,000 won and KTF jumped 3.65 percent to 29,850 won.

The tech-loaded Kosdaq market also dropped on the steep fall of the Korean currency. The Kosdaq index closed at 446.05, down 0.51 percent from Friday's close.