South Korean stocks rebounded on Tuesday, the second day of resumed short selling, after a five-session losing streak as institutions scooped up local stocks. The Korean won rose against the US dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) rose 20.17 points, or 0.64 percent, to close at 3,147.37 points.

Trading volume was moderate at about 1.3 billion shares worth some 15.6 trillion won ($13.9 billion), with losers outnumbering gainers 433 to 422.

Foreigners sold a net 74 billion won, while institutions bought 167 billion won. Retail investors offloaded a net 118 billion won.

The KOSPI traded choppy after a weak start, largely as inflation concerns and the partial resumption of short selling drove stock prices down.

Bio and tech shares dropped in the morning amid rising inflation, which could help raise market rates, while bank shares performed well. South Korea's consumer price index rose 2.3 percent on-year in April, the fastest pace in almost four years.

Market heavyweights also came under selling pressure on the second day of the resumption of short selling after a 14-month ban.

"Among the short-sellable stocks, those with high valuation pressure that went through a steep increase in the amount of their securities lending showed a distinctive fall in their prices," said Korea Investment & Securities researcher Lee Na-ye.

The stock index turned higher to gains in the afternoon, buoyed by increased institutional buying.

Chemical and bio gains led the KOSPI's rebound, while insurance and transport slumped.

Market kingpin Samsung Electronics added 1.1 percent to 82,600 won, and No. 2 chipmaker SK hynix gained 0.38 percent to 132,000 won.

Internet portal giant Naver advanced 0.41 percent to 364,500 won, and giant chemical maker LG Chem climbed 1.43 percent to 920,000 won.

Top pharmaceutical firm Samsung Biologics decreased 1.16 percent to 764,000 won.

The local currency closed at 1,122.6 won to the US dollar, up 1.4 won from the previous session's close. (Yonhap)