South Korean stocks rebounded Thursday on investors' move to buy oversold stocks after the recent stock plunge and China's interest rate cut. The Korean won fell against the US dollar.

The benchmark Korea Composite Stock Price Index (Kospi) rose 20.4 points, or 0.72 percent, to close at 2,862.68 points.

Trading volume was moderate at about 388 million shares worth some 8.7 trillion won ($7.3 billion), with gainers outnumbering losers 709 to 174.

Institutions bought a net 106 billion won and retail investors purchased 145 billion won, while foreigners sold 274 billion won.

Stocks edged up after a choppy start, following the key stock index's four-day losing streak that stemmed from concerns about the high-flying inflation rates.

The Kospi gained ground in the afternoon on reports China cut its key borrowing rates to relieve the liquidity crunch.

"It was a rare call for China to cut lending rates for two straight months. Investors in Asia seem to have taken the move as a signal Beijing is making extra efforts to support the economy," said Eugene Investment & Securities analyst Huh Jae-hwan.

Most large caps closed higher in Seoul.

Top cap Samsung Electronics increased 0.26 percent to 76,500 won, while No. 2 chipmaker SK hynix decreased 1.57 percent to 125,000 won.

Battery maker LG Chem surged 6.58 percent to 696,000 won, and Samsung SDI jumped 4.08 percent 688,000 won.

Pharmaceutical giant Samsung Biologics closed unchanged at 816,000 won, and leading carmaker Hyundai Motor gained 0.75 percent to 202,000 won.

The local currency closed at 1,192.4 won against the US dollar, down 0.7 won from the previous session's close.

Bond prices, which move inversely to yields, closed lower. The yield on three-year Treasurys added 4.6 basis points to 2.119 percent, and the return on the benchmark five-year government bond rose 4.5 basis points to 2.346 percent. (Yonhap)