South Korean stocks closed 0.5 percent higher Monday, as eased woes about an early U.S. stimulus tapering and growing expectations from the end-of-year shopping season boosted investor confidence, analysts said. The local currency fell marginally against the U.S. dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) advanced 9.75 points, or 0.49 percent to finish at 2,015.98.

Trading volume was light at 286.8 million shares worth 3.02 trillion won ($2.94 billion) with gainers far outnumbering losers 508 to 289.

The KOSPI started off some 1 percent higher at the opening bell, but it pared gains toward the later session as retail investors opted to sell off their holdings in local equities on profit-taking.

Analysts said the likelihood for the U.S. easy-money policy to stay put is expected to exert upward pressure on the local bourse.

"Foreign inflow may be volatile but the Federal Reserve made sure it would keep the monetary easing. Also the year-end shopping season is coming, which will fuel the KOSPI to rally," said Kim Soon-young, an analyst at IBK Securities Co.

Overseas investors scooped up a net 89.7 billion won, with institutions buying a net 57.5 billion won.

Domestic-focused stocks drove up the KOSPI, with builders and brokerage houses leading the rise. Hyundai Engineering & Construction gained 2 percent to 61,500 won and Kiwoom Securities soared 3.34 percent to 52,600 won.

Among large-caps, techs finished bullish, while autos lost ground. Samsung Electronics climbed 1.03 percent to 1,465,000 won, but Hyundai Motor dropped 0.2 percent to 252,500 won.

The local currency ended at 1,061.90 won against the greenback, down 1.7 won from Friday's close, following remarks by the finance minister here that the government is keeping close tabs on the won's rise against the Japanese yen. (Yonhap News)