South Korea's benchmark KOSPI rose more than 1 percent on Tuesday to reclaim the 6,700 level, supported by gains in heavyweight semiconductor shares such as Samsung Electronics and SK Hynix. Caution ahead of the U.S. Federal Open Market Committee (FOMC) meeting persisted, but bargain hunting flowed into chipmakers after a sharp recent pullback.

The KOSPI closed up 90.71 points, or 1.37 percent, at 6,717.97. The index opened down 16.02 points, or 0.24 percent, at 6,611.24 and slid to the 6,500 level in early trade.

It later turned higher as buying focused on semiconductor shares, and finished at an intraday high of 6,717.97.

Institutions net bought 1.21 trillion won of shares on the main bourse. Individuals and foreigners net sold 1.19 trillion won and 1.68 trillion won, respectively.

Among top market-cap stocks, semiconductor-related shares were strong. Samsung Electronics ended up 2.01 percent at 253,500 won, and SK Hynix rose 4.08 percent to 1,759,000 won.

SK Square gained 2.00 percent, Samsung Electro-Mechanics rose 4.86 percent, LG Energy Solution added 0.41 percent, KB Financial Group climbed 0.51 percent and Samsung C&T advanced 1.87 percent.

Hyundai Motor fell 1.36 percent and Samsung Biologics slipped 0.21 percent.

The KOSDAQ also closed higher. It rose 3.57 points, or 0.44 percent, to 815.98.

In Seoul's foreign exchange market, the won was at 1,367.80 per dollar, down 4.10 won, or 0.30 percent, from the previous session.

The KOSPI has been in a correction after topping the 7,000 level, as macro uncertainty and profit-taking in semiconductors overlapped. The KOSPI, which rose 3.3 percent last week, has shown weakness so far this week, but chipmakers rebounded on the day to recoup part of the losses.

Han Ji-young (한지영), an analyst at Kiwoom Securities, said stock adjustment pressure stemming from the U.S. Federal Reserve would be limited unless the September FOMC delivers a shock such as an additional upward move in the dot plot that signals a push to fully accelerate the tightening cycle.

Han also said that concerns about reduced AI investment would not last long, as Broadcom's chief executive officer said AI demand remains strong despite issues around pacing AI and that there was no change in revenue guidance. Han said there is a need to prioritise the possibility that South Korean stocks return to their existing recovery path if concerns about additional tightening and upward pressure on long-term yields ease after the FOMC.