Japan's trade ministry on Wednesday officially announced the exclusion of South Korea from its "whitelist" of trusted trading partners that enjoy fast-track export clearance. But it didn't add to the list of tightly regulated items exported to South Korea.

In another major worry, the US on Monday designated China as currency manipulator for the first time since 1994 after China allowed the yuan to break through the key 7-per-dollar level, pulling down the KOSPI index to the lowest in three years.

The trade war between the world's two largest economies appears to be turning into a currency war, fueling financial volatility in the markets. As investors seek safe havens, such as the dollar, the Korean currency has fallen sharply against the greenback in recent sessions. 

Institutions and individuals bought a combined 116 billion won ($96 million) worth of stocks, offsetting foreign selling valued at 114 billion won.

Most large-cap stocks rebounded across the board.

Market kingpin Samsung Electronics rose 0.4 percent and No. 2 chipmaker SK hynix Inc. climbed 0.7 percent. Top automaker Hyundai Motor Co. gained 4.3 percent and national flag carrier Korean Air Lines Co. was up 3.2 percent.

Among losers, state-run utility Korea Electric Power Corp. fell 3.6 percent and leading wireless services provider SK Telecom Co. declined 0.4 percent.

The local currency was trading at 1,209.50 won against the US dollar, up 5.4 won from the previous session's close and rebounding from a more than three-year low point.

The won fell against the dollar due to escalating US-China trade tensions but the slide will be limited as the Seoul authorities said it will take steps to stabilize the financial markets in case of any sharp volatility. (Yonhap)