South Korean stocks closed sharply higher Tuesday, joining other Asian and global stock markets in a rally that came on hopes of a vaccine for COVID-19. The local currency sharply rose against the US dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) spiked 43.50 points, or 2.25 percent, to close at 1,980.61, extending its winning streak to a third day. Trading volume was moderate at some 762 million shares worth about 11.7 trillion won ($9.55 billion), with gainers outnumbering loser 654 to 203.

The index got off to a firm start after reports of positive results from a COVID-19 vaccine test sparked stock market rallies in the US and other major economies.

The Dow Jones Industrial Average surged 911.35 points, or 3.85 percent, on Monday to close at 24,597.37.

Japan's Nikkei was up 1.49 percent as of 3:40 p.m. Tuesday (Seoul time), while the Shanghai Composite Index added 0.73 percent.

"The US stock market closed sharply higher Monday after US pharmaceutical company Moderna announced the test results of its coronavirus vaccine testing where all participants generated antibodies," Eugene Investment strategist Huh Jae-hwan said.

US Fed Chairman Jerome Powell also helped boost investor sentiments throughout the globe, according to Noh Dong-kil, an analyst at NH Investment and Securities.

"It was the Fed that had led the stock market rally before Moderna announced the result of its clinical test. Chairman Powell said the Fed has not run out of ammunition and that it may take additional steps," Noh said.

In Seoul, foreign investors snapped their six-session selling streak to purchase a net 331 billion won, with institutions scooping a net 842 billion won. Retail investors sold a net 1.18 trillion won.

Most large caps closed in positive terrain.

Market kingpin Samsung Electronics surged 3.07 percent to 50,300 won while No. 2 chipmaker SK hynix advanced 1.97 percent to 82,700 won.

Top automaker Hyundai Motor jumped 7.83 percent to 99,100 won, with its smaller affiliate Kia Motors soaring 8.01 percent to 31,700 won.

The Korean won closed at 1,225.30 won per dollar, up 7.10 won from the previous session's close.

Bond prices, which move inversely to yields, closed mixed. The yield on three-year Treasurys shed 1.1 basis points to 0.876 percent, while the return on the benchmark five-year government bond added 0.4 basis point to 1.132 percent. (Yonhap)