South Korean stocks closed 0.3 percent higher on Tuesday as investors hunted for bargains, analysts said. The local currency rose against the U.S. dollar.

After opening lower, the benchmark Korea Composite Stock Price Index (KOSPI) rose 6.03 points to 1,983.7. Trading volume was moderate at 271.8 million shares worth 3.3 trillion won (US$3 billion), with decliners outnumbering gainers 408 to 386.

The key index staged a rally on Monday after dropping for three consecutive trading sessions.

"The local stock market has been undervalued compared with other Asian stock markets. While investors may take a breather when the KOSPI breaks the 2,000-mark, the upward momentum will likely continue," said SK Securities Co. analyst Kim Young-jun.

Key exporters led the gain, with market bellwether Samsung Electronics adding 0.94 percent to 1,509,000 won.

Other auto and tech firms also ended bullish. SK hynix, the world's No. 2 memory chip maker, rose 1.55 percent to 29,500 won and top automaker Hyundai Motor jumped 2.32 percent to 220,500 won.

Machinery maker Doosan Infracore surged 4.3 percent to 15,750 won on hopes growing infrastructure investments will jack up demand for excavators.

In contrast, defensive shares ended lower. Confectionery maker Orion fell 3.35 percent to 1,040,000 won and the country's leading portal operator NHN fell 1.48 percent to 266,500 won.  

The local currency ended at 1,105.7 won against the greenback, up 5.1 won from Monday's close, amid end-month dollar selling by exporters, dealers said.

Bond prices, which move inversely to yields, closed flat. The yield on three-year Treasuries ended unchanged at 2.58 percent and the return on the benchmark five-year government bonds finished unmoved at 2.66 percent. (Yonhap News)