South Korean stocks jumped nearly 2 percent on Wednesday, buoyed by eased concerns over a U.S. interest rate hike and the upgrade of Korea's sovereign credit rating by a global appraiser. The local currency gained ground against the U.S. dollar.

The benchmark Korea Composite Stock Price Index rose 1.96 percent, or 37.89 points, to 1,975.45, the highest level in about a month. Trading volume was moderate at 565.77 million shares worth 5.6 trillion won ($4.76 billion), with gainers outnumbering decliners 622 to 176.

"U.S. markets rallied thanks to eased concerns over a rate hike, which also bolstered the overall market mood here. The previous day's announcement by S&P to raise its credit rating on South Korea also played a role by assuaging concerns among investors," said Lee Kyung-min, an analyst from Daishin Securities Co.

Foreign investors turned into net buyers for the first time in 30 trading sessions by purchasing a net 213 billion won worth of local shares. Institutions' net buying came to about 360 billion won.

Overnight, the Dow Jones industrial average climbed 1.4 percent on speculation that the U.S. Federal Reserve may delay its much-awaited rate hike. The Federal Open Market Committee starts a two-day rate-setting meeting on Wednesday (local time).

"It's still uncertain that this upward mood will last in the days to come since the market could react very sensitively to any kind of speculation and news related to the FOMC meeting," Lee said.

Large caps ended higher across the board with industry heavyweights posting marked gains.

Market bellwether Samsung Electronics jumped 2.58 percent to 1,152,000 won and top automaker Hyundai Motor gained 4.15 percent to 163,000 won.

Major chemical manufacturer LG Chem surged 7.49 percent to 251,000 won and steelmaking giant POSCO advanced 3.26 percent to 190,000 won.

Brokerage houses rebounded from recent setbacks as investors went on bargain hunting. KDB Daewoo Securities surged 5.71 percent to 12,950 won and NH Investment & Securities also rose 5.5 percent to 9,970 won.

The local currency closed at 1,175.9 won against the U.S. dollar, up 10.8 won from Tuesday's close.

Bond prices, which move inversely to yields, ended lower. The yield on three-year Treasurys rose 1.7 basis points to 1.670 percent, and the return on the benchmark five-year government bonds gained 2 basis points to 1.900 percent. (Yonhap)