The KOSPI jumped more than 5 percent in early trading, rising above 7,100, but gave up most of its gains in the afternoon. Foreigners logged net buying of more than 2.6 trillion won, but the index failed to settle above 7,000 at the close as profit-taking by institutions and individuals poured in.

On July 22, the KOSPI ended up 49.75 points, or 0.74 percent, at 6,797.70. It opened at 7,052.09, up 304.14 points, or 4.51 percent, from the previous session. It rose to the 7,100 level at one point, with gains above 6 percent, but the advance quickly narrowed.

The KOSPI recovering the 7,000 level during the session was its first in four trading days. But it slipped back into the 6,000 range by the close as gains in heavyweight semiconductor shares narrowed in the afternoon and selling by institutions and individuals increased.

A buy-side circuit breaker for the main board market was also triggered for a second straight session in the morning, following the previous day. At 9:06 a.m., program buy orders were halted for five minutes after KOSPI 200 futures rose 5.40 percent above the reference price. It was the 20th buy-side circuit breaker activation on the main board market this year.

In the main board market, foreigners posted net buying of 262.2 billion won. Retail investors had net selling of 121.9 billion won, while institutions posted net selling of 139.5 billion won.

Despite the heavy foreign buying, intraday profit-taking and high supply-demand volatility surrounding single-stock leveraged exchange-traded funds (ETFs) are seen as having capped the index's upside.

Among the top stocks by market capitalisation, Samsung Electronics ended up 1,500 won, or 0.58 percent, at 260,500 won. It rose more than 5 percent early in the session but gave up most of the gain.

SK Hynix ended down 6,000 won, or 0.33 percent, at 1,830,000 won. It climbed to 1,990,000 won shortly after the open, nearing the 2,000,000-won level, but turned lower. SK Square fell 1.84 percent and Samsung Biologics dropped 1.65 percent.

Hyundai Motor rose 4.76 percent, Samsung Electro-Mechanics added 2.67 percent, LG Energy Solution gained 1.26 percent, Samsung Life climbed 1.27 percent and KB Financial rose 0.63 percent.

The Kosdaq ended down 2.25 points, or 0.30 percent, at 751.09.

In Seoul's foreign exchange market, the won-dollar exchange rate ended at 1,478.70 won per dollar, down 3.80 won from the previous session.

Han Ji-young (한지영), an analyst at Kiwoom Securities, said, "A surge in U.S. semiconductor shares and improved foreign supply-demand are positive, but a high volatility index and a large share of single-stock leveraged trading could increase intraday volatility."