South Korean shares fell for four straight sessions on Monday as foreign investors offloaded local shares amid lingering concerns over Europe's debt crisis ahead of major events such as the Franco-German summit, analysts said.

The benchmark Korea Composite Stock Price Index (KOSPI) fell 16. 65 points, or 0.9 percent, to close at 1,826.49. Trading volume stood at 388.46 million shares worth 4.13 trillion won (3.55 billion U.S. dollars).

The KOSPI started 0.6 percent lower, and fell to 1,810.48 at one time during the trading as offshore investors sold more shares than they bought on worries over the European fiscal crisis despite positive employment data in the United States.

"Although the U.S. labor market showed better performance than expected, investors remained worried about the European debt problems. Expectations for weaker earnings results in the U.S weighed on market sentiment," Lee Jae-man, an analyst at Dongyang Securities in Seoul, told Xinhua.

Lee noted that market volatility may deepen this week ahead of major events in Europe, including the Franco-German summit, the European Central Bank (ECB)'s monetary policy meeting and government bond issuance by the debt-ridden Italy and Spain.

The U.S. labor data was better than anticipated. According to the U.S. non-farm payroll report, the world's largest economy added 200,000 jobs in the last month of 2011, marking the sixth straight month for generating 100,000 or more jobs. The jobless rate dropped to 8.5 percent in December, the lowest since February 2009.

However, market sentiment was weighed by concerns over the European debt crisis. The global credit appraiser Fitch downgraded Hungary's credit rating to junk status last weekend, maintaining the negative outlook on the rating. The yield on the Italy's 10- year government bond breached the psychologically important 7- percent level ahead of debt sales scheduled to be held later this week.

Foreign investors were net sellers for three straight trading days by offloading a net 88.9 billion won worth of local stocks. Foreigners sold 4,248 contracts of index futures, triggering program-linked selling worth 260.1 billion won.

Retail investors shored up stocks by purchasing a net 371 billion won worth of shares on views that the local stock market was undervalued. Institutional investors were net sellers before turning to net buyers later in the session with stock purchases worth 61.9 billion won.

Large-cap shares mostly lost ground on concerns over Europe. Market bellwether Samsung Electronics dropped 2.31 percent to 1, 016,000 won, keeping its selling streak for the fourth consecutive session. Memory chip giant Hynix Semiconductor dipped 2.25 percent to 23,850 won.

Cyclical shares also ended bearish. Top steelmaker POSCO fell 1. 82 percent to 378,500 won, and the world's No. 1 shipyard Hyundai Heavy Industries lost 1.62 percent to 273,000 won. Leading chemical firm LG Chem slid 1.39 percent to 319,000 won.

In contrast, auto shares ended bullish. Top automaker Hyundai Motor rose 0.91 percent to 221,500 won, and the nation's top auto parts maker Hyundai Mobis added 0.48 percent to 312,500 won. The country's No. 3 crude oil refiner S-Oil was also up 0.46 percent.

The local currency closed at 1,163.6 won against the greenback, down 0.7 won from Friday's close.

Bond prices ended lower. The yield on the liquid three-year treasury notes gained 0.03 percentage point to 3.38 percent, and the return on the benchmark five-year government bonds added 0.01 percentage point to 3.51 percent.