South Korean stocks inched up 0.31 percent on Wednesday as institutional investors scooped up local shares with telecommunication shares and shipbuilders rising, analysts said. The local currency fell against the U.S. dollar.

After trading in a narrow range, the benchmark Korea Composite Stock Price Index (KOSPI) gained 6.17 points to 2,028.81. Trading volume was moderate at 252.8 million shares worth 3.63 trillion won ($3.42 billion) with gainers outpacing losers 446 to 367.

"Foreign selling continued and investors are chasing assets of advanced economies, making local stocks markets relatively weak," said Bae Sung-young, an analyst at Hyundai Securities Co. "But the upward momentum in the market persists as the key index may test the 2,050 mark in the near term."

Foreign investors sold a net 117.3 billion won on the main bourse, but institutional buying managed to prop up the market, according to analysts.

Chip giant SK hynix gained 2.98 percent to 34,600 won and top mobile carrier SK Telecom advanced 2.97 percent to 225,500 won.

But state-invested Industrial Bank of Korea (IBK) fell 4.17 percent to 11,500 won as the government sold a part of its stake in the bank via block trading earlier in the day in a bid to raise necessary funds to meet its growing fiscal need. The move brought down the government's stake in the bank to 64.6 percent.

Other bank shares gained ground. Industry leader Woori Finance Holdings rose 0.39 percent to 12,850 won, and its rival Shinhan Financial Group inched up 0.45 percent to 44,400 won.

Shipbuilders finished in positive terrain. Hyundai Heavy Industries rose 0.18 percent to 272,500 won, and Daewoo Shipbuilding & Marine Engineering advanced 1.66 percent to 36,850 won.

The local currency ended at 1,061.10 won to the greenback, down 1.2 won from Tuesday's close as the dollar gained ground, dealers said.

Bond prices, which move inversely to yields, closed lower. The yield on three-year Treasurys gained 0.01 percentage point at 2.97 percent, and the return on the benchmark five-year government bonds also added 0.01 percentage point to 3.29 percent. (Yonhap News)