South Korean government bond prices retreated further on Monday, with European Union leaders' agreement on an aid package for Greece and stronger U.S. sentiment data raising investors' risk appetite.

Investors were also wary of the sinking of one of South Korea's naval ships on the weekend, which sent the local currency lower, as the cause of the accident remains unknown.

South Korean officials have played down earlier suggestions that the sinking may have been the result of an attack by North Korea, while Finance Minister Yoon Jeung-hyun said in a speech to a forum that the economic impact of the incident would be limited.

The benchmark 5-year treasury yield was up 3 to 4 basis points at 4.45-4.46 percent, after yields rose on Friday on concerns about new supply of debt and views that a settlement to Greece's credit problems could reduce the lure of debt assets.

Euro-zone leaders unveiled a deal late Thursday in which Athens would receive coordinated bilateral loans from other euro-zone countries.

Comments from the Reserve Bank of Australia Governor Glenn Stevens also weighed on the debt market, after he said interest rates had been too low and could not remain at previous levels, supporting market expectations that more rate rises were due.

Front-month 3-year treasury bond futures shed 8 ticks to 110.60.

Before the market open, data showed the country's current account swung back to a surplus in February on brisk exports, easing some of the concerns about slowing momentum in the global economy.

The current account balance is expected to reach about $1.5 billion in surplus this month, an official at the central bank said.

(Reporting by Kim Yeon-hee; Editing by Jonathan Hopfner)

South Korea Fall Down