South Korean stocks closed nearly flat Tuesday, paring most earlier gains, in the face of elevating trade tensions between the world's two largest economies. The Korean won rose against the US dollar.

The benchmark Korea Composite Stock Price Index (Kospi) edged up 1.41 points, or 0.05 percent, to close at 2,746.47 points.

Trading volume was moderate at about 555 million shares worth some 11.6 trillion won ($9.7 billion), with losers outnumbering gainers 544 to 313.

Foreigners sold a net 97 billion won, while institutions bought 39 billion won and retail investors purchased 46 billion won.

Stocks came off to a strong start on hopes of strong corporate earnings but trimmed most of its earlier gains in the afternoon.

Rising tensions between the United States and China hurt investor sentiment. The US tightened export regulations on China, leading to stock price fall in China and Hong Kong.

"The US-China issue, along with the rising US bond yields, soured investor sentiment and reduced demand for risky assets," said Mirae Asset Securities analyst Park Gwang-nam.

Market kingpin Samsung Electronics increased 0.68 percent to 73,500 won, and No. 2 chipmaker SK hynix grew 1.63 percent to 125,000 won.

Bio giant Samsung Biologics jumped 4.85 percent to 800,000 won on the country's surging new coronavirus cases, with Celltrion gaining 3.18 percent to 162,000 won.

Among losers, top automaker Hyundai Motor moved down 1.07 percent to 184,500 won, and the country's top EV battery maker LG Energy Solution retreated 1.09 percent to 542,000 won on profit-taking after releasing its corporate earnings report.

The local currency closed at 1,197.7 won to the US dollar, up 3 won from the previous session's close. (Yonhap)