South Korean stocks closed higher Thursday, as investors digested the options expiration ahead of the central bank's rate-setting meeting this week, analysts said. The local currency rose against the U.S. dollar.

The Korea Composite Stock Price Index climbed 6.17 points, or 0.29 percent, to finish at 2,120.33. Trading volume was moderate at 424.2 million shares worth 5.04 trillion won ($4.61 billion) with gainers outnumbering decliners 465 to 335.

"We could've seen more sell-offs as the options expiration usually entails a volatile trading, but it turned out to be less than expected. Also investors chose to stay wary ahead of the central bank's policy meeting on Friday," said Kim Jeong-hyun, an analyst at IBK Securities Co.

A lull in U.S. retail sales for April also gave investors jitters that the world's biggest economy may not be ready for an early rate hike, analysts added.

Retail sales in the world's largest economy were unchanged last month as consumers scaled back on purchases of big items like cars, indicating the economy is struggling to recover.

The KOSPI's slight gain Thursday was driven by foreigners and individuals, buying a net 21.5 billion won and 115.1 billion won, respectively. Institutions, in contrast, dumped a net 135.8 billion won.

Retailers and construction firms closed bullish. Supermarket chain Emart soared 3.7 percent to 252,500 won, and Daewoo Engineering & Construction spiked 6.1 percent to 7,650 won.

Automakers lost ground. Top player Hyundai Motor fell 1.2 percent to 164,000 won, with its smaller affiliate Kia Motors dipping 2.08 percent to 49,550 won.

The local currency ended at 1,090.50 won against the greenback, up 9.2 won from Wednesday's close, as foreigners scooped up local equities, dealers said.

Bond prices, which move inversely to yields, closed higher. The yield on three-year Treasurys slipped 0.7 basis point to 1.857 percent and the return on the benchmark five-year government bonds fell 4.0 basis points to 2.102 percent. (Yonhap)