South Korean stocks closed 0.51 percent higher on Tuesday on the back of foreigners' buying, but the gain was capped due to remaining corporate uncertainties, analysts said. The local currency fell slightly against the U.S. dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) added 10.02 points to finish at 1,993.09. Trading volume was moderate at 446.9 million shares worth 4.55 trillion won ($4.24 billion) with gainers outnumbering losers 426 to 384.

"We've seen steady foreign inflows in recent days following Washington's fresh move to buy more government bonds. It's a sign that liquidity keeps coming in," said Bae Sung-young, an analyst at Hyundai Securities Co.

Offshore investors scooped up a net 225.1 billion won, extending the buying spree to 14 straight sessions. Since Nov. 29, they have bought a combined net 2.74 trillion won on the main bourse.

Progress on the U.S. fiscal spending cut talks between President Barack Obama and House Speaker John Boehner on Monday also lifted investor sentiment, Bae added.

Brokerage firms pushed up the main index, with Woori Investment & Securities rising 2.62 percent to 11,750 won. Chemical issues got a boost with LG Chem climbing 2.47 percent to 332,500 won, on the latest Chinese manufacturing data supporting the claim that Asia's largest economy is improving.

In contrast, auto shares fell for a third consecutive trading day, as the new Japanese leadership vowing monetary easing bodes ill for local carmakers, who will likely suffer from a weakening yen. No. 1 player Hyundai Motor and its affiliate Kia Motors slid 0.44 percent to 224,000 won and 0.84 percent to 58,700 won, respectively.

The local currency ended at 1,072.80 won against the greenback, down 0.3 won from Monday's close, largely due to market concerns over a depreciating Japanese yen, dealers said.

Bond prices, which move inversely to yields, closed lower. The yield on three-year Treasuries inched up 0.02 percentage point to 2.90 percent and the return on the benchmark five-year government bonds rose 0.03 percentage point to 3.05 percent. (Yonhap News)