South Korean stocks finished over 1 percent higher Wednesday as a slowdown in US inflation boosted hope for the Federal Reserve's less aggressive monetary tightening. The local currency rose against the US dollar.

The benchmark Korea Composite Stock Price Index rose 1.13 point, or 26.85 percent, to close at 2,399.25, ending a two-day winning streak.

Trading volume was light at 402.37 million shares worth 5.59 trillion won ($4.31 billion), with gainers outstripping decliners 632 to 226.

The market opened higher, tracking US gains, and had maintained strong upward momentum throughout the session.

Institutional and foreign investors bought a net 228.6 billion won and 219.9 billion worth of shares, respectively, while retail investors sold 45.334 billion won worth of shares.

The US consumer price index rose less than expected in November and posted the smallest annual increase in about a year, raising hope that inflation is peaking.

The index rose 0.1 percent from the previous month and 7.1 percent on-year, while economists forecast a 0.3 percent on-month increase and a 7.3 percent on-year rise.

"The CPI data could strengthen calls for a softer monetary policy at the Federal Reserve's rate-setting meeting," Kiwoom Securities analyst Han Ji-young said.

Investors are now awaiting the results of the Fed's two-day meeting set to be available on Wednesday, and Fed Chair Jerome Powell's comment on its economic assessment and future policy direction.

In Seoul, most blue chips ended higher, with tech shares leading the overall upturn.

Market behemoth Samsung Electronics rose 1.34 percent to 60,500 won, and battery maker LG Energy Solutions grew 0.4 percent to 498,500 won.

Samsung SDI surged 3.73 percent to 667,000 won, and leading chemical firm LG Chem soared 3.69 percent to 646,000 won.

But chip giant SK hynix lost 0.61 percent to 81,800 won on profit taking.

Bio shares gathered ground after the government issued an emergency order to increase production of acetaminophen tablets in the wake of a cold medicine shortage in winter.

Samsung Biologics jumped 2.07 percent to 837,000 won, and Celltrion advanced 1.68 percent to 182,000 won.

Carmakers also rose, with top automaker Hyundai Motor climbing 2.51 percent to 163,500 won and its affiliate Kia going up 2.56 percent to 64,100 won.

Internet giant Naver rose 0.26 percent to 193,500 won, and Kakao, the operator of the popular mobile messenger KakaoTalk, added 0.86 percent to 58,700 won.

The Korean won ended at 1,296.3 won against the US dollar, up 9.7 won from the previous session's close. (Yonhap)