Korean stocks closed marginally higher Tuesday on eased risk-averse sentiment. The local currency dropped against the U.S. dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) gained 8.26 points, or 0.42 percent, to 1,986.41. Trade volume came to 306.4 million shares worth 3.7 trillion won ($3.2 billion), with gainers outnumbering losers 502 to 287.

The KOSPI opened higher following the overnight uptrend in Wall Street, but its gains were limited on a cautious note ahead of the four-day holiday season to start on Thursday. Uncertainty over Chinese economic data also weighed on the market.

Institutional investors sold a net 176 billion won worth of stocks, while individuals and foreigners scooped up shares.

Analysts said Seoul shares will likely continue to rally after taking a breather in the near future.

"The KOSPI is expected to move in the range of 1,980-2,080 points in May," said Kim Sung-hwan, an analyst at Bookook Securities.

He cited investors' appetite for risky assets amid a delay in the Fed's interest rate hike.

Top market cap Samsung Electronics rose 0.88 percent to 1,261,000 won, and industry leader Hyundai Motor was flat at 142,500 won.

State-run Korea Electric Power Corp. added 0.98 percent to 61,800 won, and leading steelmaker POSCO was up 0.66 percent to 230,000 won.

Builders also advanced amid hopes that they may clinch a series of construction projects in Iran following President Park Geun-hye's visit to Tehran.

Hanshin Engineering & Construction rose 2.31 percent to 22,100 won, Daelim Industrial gained 0.11 percent to 89,000 won, and Hyundai Development added 1.94 percent to 49,950 won.

Korea's won closed at 1,140.20 won against the greenback, down 2.40 won from the previous session. (Yonhap)