SEOUL -- South Korean stocks closed 0.77 percent higher Wednesday, buoyed by easing Chinese inflation data that offset heightening fears over North Korea's repeated war threats, analysts said. The local currency inched up against the U.S. dollar.
   
The benchmark Korea Composite Stock Price Index (KOSPI) climbed 14.84 points to finish at 1,935.58. Trading volume was light at 312.4 million shares worth 4.08 trillion won (US$3.57 billion) with advancers far outpacing decliners 640 to 187.
   
"A country's economic policy stems from its inflation index. China's slowing consumer prices give positive signals to the market," said Park Sung-hoon, an analyst at Woori Investment & Securities Co.
  
North Korean risks are never to be underestimated, but they also have become an underlying factor that everyone knows, Park said, adding that any signs of such threats fading will drive up the KOSPI.
   
Foreigners returned, snapping a five-day selling streak with a net buying of 33.7 billion won. They notably increased bets in electronics, chemical and steelmakers, reflecting growing expectations for a rebound in such industries, according to analysts.
  
Shares of steelmakers and brokerage houses moved up the main index. Dongkuk Steel Mill, the No. 3 steelmaker, spiked 5.14 percent to 11,250 won. Major brokerage firm Mirae Asset Securities shot up 3.92 percent to 42,400 won, following the parliament's passage of the revised capital market bill the previous day, which allows them to start prime brokerage services.
   
Large-cap exporters gathered ground, with leading home appliance maker LG Electronics surging 5.2 percent to 85,000 won and flat panel giant LG Display jumping 4.05 percent to 30,850 won.
  
However, tech heavyweight Samsung Electronics slipped 0.46 percent to 1,521,000 won, with some defensive shares -- Korea Electric Power Corp. and Korea Gas Corp. -- dropping 2.21 percent and 3.46 percent to 28,700 won and 64,200 won, respectively.   

Domestic-oriented companies also finished bearish. Retail giant E-mart lost 1.23 percent to 201,000 won, with Lotte Shopping falling 0.63 percent to 396,500 won.
   
The local currency ended at 1,135.70 won against the greenback, up 3.7 won from Tuesday's close, on the back of foreign buying, dealers said.
  
Bond prices, which move inversely to yields, closed slightly higher. The yield on three-year Treasuries inched down 0.01 percentage point to 2.48 percent and the return on the benchmark five-year government bonds also fell 0.01 percentage point to 2.58 percent. (Yonhap News)