Analysts said market sentiment improved on expectations that the political situation surrounding North Korea will improve.

Earlier, South Korea's top diplomat said the United States will first consult with South Korea before taking any serious measures, including a pre-emptive strike, against Pyongyang.

"There is sentiment that geopolitical concerns would be eased if the United States does not antagonize North Korea further," said Kim Sung-hwan, an analyst at Bookook Securities Co.

Foreign investors offloaded a net 141.4 billion won worth of local stocks, while institutions and individuals were net buyers by snatching up 35.9 billion won and 116.9 billion won, respectively.

Most large caps closed mixed.

Top cap Samsung Electronics gained 1.24 percent to 2,121,000 won on news that pre-orders for the company's latest high-end smartphone, the Galaxy S8, has been better than expected.

Pre-orders for the flagship device surpassed a whopping 720,000 units in just seven days, the company said.

SK hynix, a major chipmaker, also added 1.53 percent to 49,750 won, extending its winning streak to a second day.

Naver, the operator of the country's top Internet portal, jumped 4.43 percent to end at 802,000 won, snapping a seven-day losing streak.

Game behemoth NC Soft shot up 6.22 percent to a record-high of 358,500 won after pre-orders for its new Lineage M game posted a record for the local games industry. The company announced that is has received 1 million pre-registrations for its role-playing game in just eight hours.

Auto shares were mixed with leading automaker Hyundai Motor adding 0.71 percent to 142,500 won after unveiling a concept SUV under its Genesis luxury brand at the New York Auto Show. The GV80 fuel-cell concept SUV is the first SUV model revealed by Hyundai Motor under the independent Genesis brand.

Its sister company, Kia Motors, meanwhile, lost 1 percent to 34,750 won. Auto parts maker Hyundai Mobis remained flat at 222,000 won.

The local currency closed at 1,129.70 won against the US dollar, up 11.7 won from the previous session's close.
 
Bond prices, which move inversely to yields, closed higher. The yield on three-year Treasurys fell 1.2 basis points to 1.674 percent, and the return on the benchmark five-year government bond shed 3.0 basis points to 1.855 percent.(Yonhap)