Inter-Korean talks in Seoul generated a limited positive response from investors as they see far tougher talks ahead, he said.
The KOSPI index closed down 8.37 points at 1,002.43.
Hong Kong share prices reversed morning losses to close 0.28 percent higher as investors bought property stocks in late trade on hopes of strong apartment sales over the weekend.
The Hang Seng Index closed up 39.85 points at 14,230.29.
CNOOC was up HK$0.025 at HK$4.25 as investors await further developments on its bid for Unocal, with the stock's gains supported by high oil prices.
Shanghai gains
Shanghai share prices closed 0.75 percent higher on a modest rebound in the late afternoon led by petrochemical producers and real estate firms.
The Shanghai A-share Index gained 8.60 points to 1,157.19, while the Shenzhen A-share Index rose 1.32 points or 0.48 percent to 277.63. The benchmark Shanghai Composite Index, which covers both A and B-shares, added 8.18 points or 0.75 percent at 1,101.88.
Australian share prices closed 0.57 percent lower in cautious trade after crude oil prices hit record levels overnight, sparking heavy losses on Wall Street.
The SP/ASX index fell 24.3 points to 4,245.6.
Singapore share prices closed flat despite the heavy losses on Wall Street overnight, with selected energy stocks the main focus of investors' attention. The Straits Times Index closed up 0.27 points at 2,223.72.
Malaysian share prices closed 0.47 percent lower. The composite index closed down 4.23 points at 898.08.
In Bangkok share prices closed 0.42 percent lower due to investors' concerns about record high oil prices and an upcoming censure debate against the Thai transport minister. The composite index dropped 2.88 points to close at 690.25 points.
In Jakarta share prices closed 0.15 percent lower in a technical correction that was offset by a rebound in index heavyweight Telkom. The composite index closed down 1.757 points at 1,135.667.
Manila share prices closed 0.41 percent lower, with sentiment under pressure as oil prices hit record highs and the military went on alert ahead of expected street protests against Philippine President Gloria Arroyo. The composite index fell 8.01 points to 1,947.21.
In Wellington share prices closed down 1.13 percent following weaker than expected local economic growth data and a fall on Wall Street. The NZSX-50 gross index shed 35.36 points to 3,137.67.
In Mumbai share prices closed 0.41 percent higher as investors picked up stocks on the steady advance of the annual southwest monsoon rains across the farm-dependent country. The 30-share SENSEX rose 28.86 points to close at 7,148.62.
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