South Korean shares managed to stay in positive terrain late Tuesday morning on cautious optimism about the U.S. economy and Japan's move toward a new stimulus package.

The benchmark Korea Composite Stock Price Index rose 2.1 points, or 0.11 percent, to 1,990.64 as of 11:20 a.m.

The market was apparently encouraged by strong U.S. job data and Japanese Prime Minister Shinzo Abe's call for a new round of fiscal stimulus spending.

The KOSPI remained in a tight range as its gains were limited amid geopolitical risks from South Korea's decision to allow the U.S. to deploy the THAAD missile defense system on its soil despite fierce opposition from North Korea and China, analysts said.

The main index also jumped 0.83 percent on Monday from the previous session, leaving some investors prudent in buying stocks.

"A sense of vigilance is necessary as the KOSPI's fluctuations may widen due to the decision to deploy THAAD," Kim Jin-young, a stock analyst at the NH Investment & Securities Co. said. "There is a likelihood that political tensions will continue for a considerable time, given that China has expressed a strong negative view (of the THAAD decision) and it's locked in a stand-off with the U.S. in the South China Sea."

Institutional and individual investors were net sellers, while foreigners were net buyers.

Top cap Samsung Electronics Co. was virtually unchanged and leading automaker Hyundai Motor Co. rose 0.76 percent. The state-run Korea Electric Power Corp. slid 0.17 percent.

The local currency was trading at 1,149.55 won against the U.S. dollar, down 2.85 won from the previous session's close. (Yonhap)