Korean shares advanced for a third straight session on Wednesday as investors scooped up oversold stocks following firm pledges by authorities to underpin the markets reeling from the post-Brexit turmoil.

The benchmark Korea Composite Stock Price Index rose 20.14 points, or 1.04 percent, to 1,956.36. Some 446.7 million shares worth 4.76 trillion won ($4.1 billion) traded hands on the main bourse, with 696 stocks advancing against 140 declining.

Investors had welcomed policy actions promised by central banks and governments of pumping liquidity into financial markets to minimize market volatility following Britain's unprecedented vote last week to leave the 28-nation European Union, analysts said.

But they increasingly remained cautious on expectations that foreigners may dump additional riskier assets, including Korean shares, if the promised fiscal stimulus and monetary easing plans do not go as planned.

"After Brexit, foreigners are expected to increase the portion of safe assets such as the dollar in their portfolios. But any concrete policy actions and any tangible results may promote their risk-on appetite down the road," Mirae Asset Daewoo analyst Ko Seung-hee said.

On Tuesday, the Korean government said it will draw up a 10 trillion won ($8.6 billion) supplementary budget to cushion the fallout from the Brexit turmoil and support the country's economic growth. On the same day, the finance ministry cut its growth outlook to 2.8 percent from an earlier estimate of 3.1 percent for this year.

"The government's stimulus plans apparently continued to help the markets," said Lee Jun-hee, an analyst at NH Investment & Securities Co.

On Wednesday, foreigners bought a net 56.54 billion won worth of local stocks after offloading a total 755 billion won during the past three sessions. Institutions and individuals sold a combined 95.35 billion won on profit taking.

Most large-cap stocks advanced across the board. 

Among standout gainers, the state-run Korea Electric Power Corp. rose 1.35 percent to 60,100 won, leading cosmetics maker AmorePacific Corp. gained 1.30 percent to 429,000 won, and No. 1 chemical company LG Chem Ltd. climbed 7.76 percent to 257,000 won.

In contrast, market bellwether Samsung Electronics Co. shed 0.21 percent to 1,396,000 won and top auto parts maker Hyundai Mobis Co. declined 1.15 percent to 258,500 won. 

The local currency closed at 1,160.20 won against the U.S. dollar, up 11.10 won from the previous session's close.

Bond prices, which move inversely to yields, closed higher. The yield on three-year Treasurys fell 1.0 basis point to 1.238 percent and the return on the benchmark five-year government bond lost 1.7 basis points at 1.284 percent. (Yonhap)