Seoul Shares Tumble 2.5% on Oil Price Hike

South Korean stocks tumbled Wednesday as investors went on a selling spree on concerns that skyrocketing oil prices and financial woes in the U.S. could derail the global economy.

The benchmark Korea Composite Stock Price Index (KOSPI) fell 42.86 points, or 2.57 percent to 1,623.6, the lowest in more than three months. Volume was moderate at 330.27 million shares worth

5.23 trillion won ($5.05 billion), with losers outpacing gainers 742 to 103.

"There was at lot of panic selling across the board, with investors dumping shares including shipyard and construction companies," Park Seok-hyun, an analyst at Eugene Investment & Securities, was quoted as saying by Yonhap News. "Especially, foreign investors seemed to trim their holdings as part of efforts to seek safer investment assets away from emerging markets."

Most blue chips fell sharply, with airline, shipping and other oil-sensitive shares hit hard.

Top flag carrier Korean Air plunged 8.33 percent to 44,000 won on concerns that rising crude prices could eat into its profitability. No. 2 carrier Asiana Airlines fell 4.8 percent to close at 5,160 won.

Industry leader Hanjin Shipping plummeted 3.47 percent to 37,500 won, while top power equipment manufacturer Doosan Heavy Industries & Construction shed 7.47 percent to 86,700 won.

Industry leader POSCO lost 3.86 percent to 523,000 won and smaller Hyundai Steel plunged 7.01 percent to 71,600 won.

Telecom issues, however, bucked the market downswings. No. 1 mobile carrier SK Telecom inched up 0.53 percent to 191,000 won, while smaller KTF rose 0.09 percent to 28,000 won.

On Tuesday, the price of Dubai crude, South Korea's benchmark, hit a new record of $136.56 per barrel, up $0.4 from the previous day.

The tech-savvy Kosdaq market closed at 556.79, down 4.13 percent from Tuesday's close, a fall for the fourth consecutive session.

The Korean currency closed at 1,036.8 won against the dollar, up 10.1 won from Tuesday's close, after foreign exchange authorities reportedly sold an unspecified amount of the greenback to prop up the won.