The benchmark Korea Composite Stock Price Index (Kospi) rose 2.1 points, or 0.07 percent, to close at 3,127.86 points.
Trading volume was moderate at about 718 million shares worth some 13.3 trillion won ($11.3 billion), with gainers outnumbering losers 579 to 286.
Foreigners bought a net 139 billion won, while retail investors sold 336 billion won. Institutions purchased a net 205 billion won.
Stocks got off to a slow start after North Korea's state media reported earlier in the day that Pyongyang had successfully test-fired a new type of long-range cruise missile over the weekend.
Local stocks also came under selling pressure after US data pointed to rising inflation in the world's largest economy.
The Dow Jones Industrial Average closed down 0.78 percent in the previous session, with the tech-heavy Nasdaq Composite and the S&P 500 dipping 0.87 percent and 0.77 percent, respectively.
After a choppy session, the Kospi rebounded on foreign and institutional buying.
"Investors seem to be testing the waters ahead of the FOMC meeting next week," said Mirae Asset Securities analyst Park Gwang-nam. "Until then, political issues may play out (in the stock markets)," he said.
Tech and steel closed higher in Seoul, while most other market heavyweights slumped.
Top cap Samsung Electronics added 1.33 percent to 76,300 won, and No. 2 chipmaker SK hynix advanced 1.43 percent to 106,500 won.
Internet portal operator Naver moved down 0.49 percent to 408,000 won, and pharmaceutical giant Samsung Biologics decreased 1.3 percent to 913,000 won. The country's largest steelmaker POSCO jumped 4.17 percent to 375,000 won.
Leading chemical firm LG Chem rose 0.95 percent to 747,000 won, but top automaker Hyundai Motor retreated 0.73 percent to 205,000 won.
Mobile messenger operator Kakao and its subsidiaries lost amid political move to regulate unfair business practices in platform businesses. Kakao plunged 4.23 percent to 124,500 won, and No. 1 bank Kakao Bank tumbled 6.24 percent to 64,600 won, the lowest closing since its listing early last month.
The local currency closed at 1,176 won against the US dollar, down 6.9 won from the previous session's close.
Bond prices, which move inversely to yields, closed lower. The yield on three-year Treasurys rose 2.4 basis points to 1.525 percent, and the return on the benchmark five-year government bond added 1 basis point to 1.760 percent. (Yonhap)