South Korean shares closed lower on Tuesday as investors sought to book profit after a 2% gain in the stock market the previous day.

The Korea Composite Stock Price Index or Kospi fell by 7.18 points, or 0.27%, to close at 2,637.22. The Kosdaq increased by 1.84 points, or 0.25%, to close at 727.11.

In economic news, South Korea's composite consumer sentiment index increased by 8 points to 101.8 in May from 93.8 in April, indicating a rebound, according to data released by the Bank of Korea on Tuesday.

A reading above 100 indicates an improvement in outlook, while a reading under 100 suggests pessimism.

Sentiment toward current living standards rose by three points to 90, while sentiment on the future outlook grew five points to 97.

The outlook for future household income was three points higher at 99, and sentiment for future household spending climbed three points to 108.

Optimism regarding current local economic conditions increased by 11 points to 63, and the reading for future domestic economic conditions was 18 points higher at 91.

In other economic news, foreign currency deposits in South Korea fell by $680 million to $96.26 billion in April from March, driven by a $2.08 billion decline in dollar deposits due to raw material payments and loan repayments by companies, Bank of Korea data indicated Monday.

Euro deposits rose by $970 million due to temporary deposits of current transaction costs due to the strengthening of the euro, while yuan deposits increased by $310 million due to dividend receipts from some companies.

In corporate news, the Korea Fair Trade Commission (KFTC) launched an on-site investigation into Korea Zinc (KRX:010130) on Tuesday over allegations that Chairman Choi Yoon-beom used overseas affiliates to form a circular shareholding structure to retain managerial control.

The probe follows a complaint filed in January by MBK Partners and the Youngpoong alliance.

Authorities are focusing on a 10.3% stake in Youngpoong transferred to Australia-based Sun Metals Corporation, reportedly just before a key shareholders' meeting, which potentially breached the Fair Trade Act.

Shares of Korea Zinc fell more than 4% at market close on Tuesday.

In other news, Celltrion (KRX:068270) will issue 8.5 million new shares, utilizing repurchased treasury shares to limit the impact on circulating stock, the South Korean biopharmaceutical company said Tuesday.

This brings the issuance to 0.04 new common shares per existing share, with a listing date set for July 25 and a record date of June 10, the release said.

The bonus issue, which offers an effective 4% stock dividend, aims to reward shareholders and address undervaluation concerns related to short selling and external market pressures, it said.

Shares of Celltrion rose nearly 2% at market close.