South Korean stocks closed higher Tuesday on the back of improved investor sentiment despite growing geopolitical tensions caused by North Korea's intercontinental ballistic missile launch, analysts said. The Korean won fell against the US dollar.

The benchmark Korea Composite Stock Price Index advanced 20.25 points, or 0.84 percent, to close at 2,422.96. Trade volume was slim at 259 million shares worth 5.5 trillion won ($5.1 billion), with gainers far outnumbering losers 608 to 204.

Analysts said market sentiment improved despite the political situation surrounding North Korea due to outside factors, such as the weak US dollar and oil rally. On Monday (local time), the dollar added to its biggest monthly retreat since January and the price of oil rose again after its best week of the year.

"The stock markets of developing nations have become attractive due to the weak US dollar and rising oil prices," said Kim Byung-yeon, a researcher at NH Investment & Securities Co.

Foreign and individual investors offloaded a net 34.9 billion won and 175.7 billion won worth of local stocks, respectively, while institutions were net buyers by snatching up 180.7 billion won to continue a seven-day rally.

Tech shares closed mixed, with top cap Samsung Electronics gaining 0.83 percent to 2,430,000 won. SK hynix, a major chipmaker, meanwhile, lost 0.76 percent to 65,500 won, and LG Display surrendered 0.95 percent to 31,350 won.

Auto shares were also mixed with leading automaker Hyundai Motor adding 0.34 percent to 145,500 won and its sister company Kia Motors gaining 0.41 percent to 36,750 won. Auto parts maker Hyundai Mobis, meanwhile, lost 0.2 percent to 245,500 won.

The local currency closed at 1,121.30 won against the US dollar, down 2.3 won from the previous session's close. 

Bond prices, which move inversely to yields, closed lower. The yield on three-year Treasurys rose 0.9 basis point to 1.733 percent, and the return on the benchmark five-year government bond jumped 2.4 basis points to 1.950 percent. (Yonhap)