* KOSPI falls 0.1 pct on day, nearly 2 pct on month
* Financials lose on profit-taking
* Automakers regain ground as won eases
* LG Elec, S-Oil fall on weak earnings
By Hyunjoo Jin
SEOUL, Jan 31 South Korean shares inched lower on Thursday after two days of gains in cautious trading ahead of U.S. monthly nonfarm payroll data on Friday.
The Korea Composite Stock Price Index (KOSPI) ended down 0.1 percent at 1,961.94 points, posting a monthly loss of 1.8 percent in January.
The KOSPI has underperformed Asia shares this month, weighed down by a stronger local currency that eats into the value of overseas earnings of its tech and auto exporters.
It managed to stage a small rally after marking its lowest point in over a month on Jan. 28, but the upside for now looks capped.
"Market momentum remains weak, hurt by worries that corporate earnings will slow down," said Park Seok-hyun, an analyst at KTB Investment & Securities.
Sentiment was hurt after data showed that the U.S. economy unexpectedly contracted in the December quarter.
But auto shares rebounded after the South Korean government warned of stronger capital flow controls to curb speculation, pushing the won lower.
Hyundai Motor, South Korea's top automaker, firmed 0.7 percent, while second-ranked Kia Motors gained 2.4 percent.
Rival Toyota Motor Corp said it will recall nearly 1.3 million cars globally for two separate defects, including 752,000 Corolla and Corolla Matrix vehicles in the United States in its third recall since October to involve more than a million cars.
Among financials that fell after recent sharp gains, Shinhan Financial Group lost 2.3 percent, while KB Financial Group fell 2.4 percent.
LG Electronics fell 1.9 percent as weak profitability in its TV division overshadowed a recovery for its smartphones.
Morgan Stanley slashed its outlook for LG Electronics' 2013 operating profit by 14 percent to 1.24 trillion won, reflecting the firm's weak guidance and the firmer South Korean currency.
S-Oil declined 1.9 percent after the refiner reported that its operating profit slumped 82 percent to 71.7 billion won in the December quarter, from a year earlier.
Move on day +0.13 percent
12-month high 2,057.28 14 March 2012
12-month low 1,769.31 25 July 2012
Change on yr -1.76 percent
All-time high 2,231.47 27 April 2011
All-time low 93.10 6 January 1981 (Reporting by Hyunjoo Jin; Editing by Edwina Gibbs & Kim Coghill)