Seoul shares closed nearly 1 percent higher on Tuesday as sustained foreign buying lifted Samsung Electronics and other technology issues and as take-over talk rekindled interest in shares of local brokerages.
But investors remained cautious, holding off on sizeable equity investments on global security fears, an uncertain economic outlook and record high oil prices, analysts said.
"Persistent foreign buying brought some psychological stability to the market," said Kim Jung-hwan, a strategist at LG Investment Securities.
"Technology stocks and financials benefited the most from the foreign buying, but the market still remains vulnerable to external risks such as higher oil prices."
The benchmark Korea Composite Stock Price Index (KOSPI) closed 0.95 percent higher at 726.44 points, scoring a slight rebound after finishing at a 10-month closing low on Monday.
Foreigners bought a net 129.1 billion won ($110.9 million) worth of shares on the main exchange. Retail investors sold a net 119.3 billion won and retail investors sold a net 17.1 billion won.
Samsung Electronics Co Ltd, the world's biggest memory chip maker, rose 1.23 percent to close at 413,000 won, while top home appliances maker LG Electronics Inc ended 1.45 percent higher at 49,000 won. Flat-screen maker Samsung SDI ended up 0.92 percent at 109,500 won.
But Hynix Semiconductor Inc, the world's third-biggest memory chip maker, closed down 3.4 percent at 8,530 won after Japan said it would start an investigation that could lead to duties on imports of DRAM chips made by the South Korean firm.
Shares in top mobile carrier SK Telecom Co jumped 3.56 percent to end at 160,000 won after the company said its market share rebounded in July as two smaller rivals were hit with marketing suspensions.
Hyundai Motor Co climbed 3.07 percent to end at 43,700 won. The brokerage sub-index leapt more than 3 percent, led by gains in SK Securities Co on talk of an acquisition.
Volume stood at 301 million shares valued at 1.3 trillion won. Winners outpaced losers by 364 to 337, with 85 shares ending flat. The junior Kosdaq market rose 0.15 percent to 325.66. The September KOSPI 200 futures index rose 0.30 point to 93.30 and the underlying KOSPI 200 spot index gained 1.02 point to 94.21.