South Korean stocks rallied 1.4 percent Wednesday as investors hunted for bargains on a recovery in oil prices and hopes for a relief message from the U.S. central bank. The local currency closed higher against the U.S. dollar.

The benchmark Korea Composite Stock Price Index  added 26.18 points to end at 1,897.87. Trade volume was moderate at 345.5 million shares worth 4.99 trillion won ($4.15 billion), with winners beating losers 478 to 346.

The local market joined the wave of the global bull run, including an overnight rally on Wall Street, as oil prices rebounded on hopes that members of the Organization of the Petroleum Exporting Countries and producers outside the cartel would join hands to cut output to stem a further price slide.

"Also a source of relief is that the U.S. Fed is widely forecast to reassure us that it would take a very gradual path in belt-tightening," said Kiwoom Securities expert Kim Hyun-jo.

The U.S. Fed kicked off a two-day key policy meeting on Tuesday (U.S. time), where it is anticipated to freeze the target rate. Its statement will be due on Wednesday afternoon.

"Major global economies' commitments to quantitative easing would also help prevent the global market from further worsening," he added. 

Institutions scooped up a net 274.9 billion won to lead gains, while individuals dumped a net 307.49 billion won of shares.

Overseas investors purchased a net 29.49 billion, snapping its record 37-session selling spree that had weighed down the index.

Most sectors finished in positive terrain, with tech and chemicals leading the gains.

Tech behemoth Samsung Electronics advanced 3.34 percent to 1,175,000 won, and LG Electronics surged 5.47 percent to 57,800 won.

LG Chem, the nation's largest chemical and battery maker, soared 5.21 percent to 293,000 won after sinking 7.78 percent the previous session upon the news that China plans to phase out subsidies for green energy vehicles.

Auto makers also traded bullish following a dip in the previous session due to grim fourth-quarter earnings.

Top automaker Hyundai Motor added 0.74 percent to 137,000 won and No. 2 carmaker Kia Motors surged 3.18 percent to 48,600 won.

Hyundai Mobis, the country's top auto parts maker, also surged 4.93 percent to 255,500 won.

Construction shares were also among marked gainers amid heightened hopes for winning more contracts in the Middle East.

Earlier in the day, an official at Cheong Wa Dae said President Park Geun-hye is considering visiting Iran, which would help local firms make inroads into the market.

Hyundai Engineering & Construction jumped 6.92 percent to 34,750 won, and GS Engineering & Construction spiked 10.2 won to 24,500 won.

The brisk market also brought up financials. KB Financial picked up 2.59 percent to 29,750 won, and Hana Financial gathered ground 2.51 percent to 20,450 won.

The local currency ended at 1,202.0 won against the greenback, up 2.2 won from Tuesday's close.  

Bond prices, which move inversely to yields, closed lower. The yield on three-year Treasurys added 0.5 basis point to 1.604 percent while the return on the benchmark five-year government bonds gained 1 basis point to 1.744 percent. (Yonhap)