South Korean stocks gained 0.3 percent on Monday as Moody's upgrade of the nation's credit rating boosted investor sentiment here, defying renewed worries over a global oil glut. The local currency also strengthened against the U.S. dollar.

The benchmark Korea Composite Stock Price Index added 5.84 points to 1,981.16. Trade volume was thin at 532.53 million shares worth 2.68 trillion won ($2.27 billion), with winners beating losers 434 to 374.

Investor sentiment was lifted after Moody's Investors Service on Saturday upgraded South Korea's credit rating one level to Aa3, the highest ever for the country, and changed the outlook from positive to stable for its fiscal prudence.

However, an extended foreign sell-off amid low oil prices put a cap on the gains.

"The U.S. Fed's rate hike last week cleared market uncertainties, but the relief was short-lived because crude oil prices dipped to new lows," said Lee Sang-joon, an analyst at Golden Bridge Investment & Securities, said.

"Although falling oil prices generally lessen the burden on companies, the extended pressure on major oil producers could lead to weakening demands for Korean products."

Offshore investors continued to dump a net 117.06 billion won, extending their selling streak to a 14th straight session, while institutions scooped up 215.23 billion won worth of local stocks.

Petrochemicals rose on hopes that cheap oil prices could increase their cracking margins down the road.

Top refiner SK Innovation rose 2.49 percent to 78,100 won, and No. 3 S-Oil gained 2.49 percent to 78,100 won.

Daewoo Securities, a major brokerage house, increased 1.14 percent to 11,000 won after four potential investors placed bids to buy a 43 percent stake in the country's second-largest brokerage house from state-run Korea Development Bank.

Auto shares were down on news that Hyundai Motor Group will take over a 23-percent stake in its auto financing joint venture from its U.S. partner, GE Capital, on Tuesday.

Top automaker Hyundai Motor declined 1.3 percent to 52,000 won, and its sister company Kia Motors retreated 3.04 percent to 54,200 won.

Korea Aerospace Industries, South Korea's sole aircraft maker, slipped 3.23 percent to 77,900 won after a T-50 trainer jet crashed during an air show in Indonesia on Sunday, killing the two pilots aboard. The cause of the crash of the South Korea-made light attack fighter is not yet known.

The local currency ended at 1,177.6 won against the greenback, up 5.4 won from Friday's close.

Bond prices, which move inversely to yields, closed higher. The yield on three-year Treasurys shed 3.5 basis points to 1.658 percent and the return on the benchmark five-year government bonds lost 2.6 basis points to 1.827 percent. (Yonhap)