Hana Bank's dealing room in Seoul / Yonhap

Korean stocks closed over 1 percent higher Tuesday as investors shored up blue chips following Washington's decision to postpone the imposing of tariffs on goods from Canada and Mexico. The Korean won was trading higher against the U.S. dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) rose 27.74 points, or 1.13 percent, to close at 2,481.69.

Trade volume was high at 473 million shares worth 18.8 trillion won ($7.39 billion), with winners outpacing losers 690 to 207.

Institutions and foreign investors combined bought a net 205.7 billion won worth of local shares, while retail investors sold a net 296 billion won.

On Monday, the KOSPI plummeted 2.52 percent amid concerns over the United States' decision last week to impose high tariffs on goods imported from Canada and Mexico, potentially affecting Korean businesses operating there.

But U.S. President Donald Trump has decided to pause the imposition of tariffs on Canada and Mexico for a month, as the two countries unveiled new plans to fend off drug trafficking at their borders.

"The domestic stock market seems to have rebounded, driven by perceptions of excessive declines in the previous session and the news of postponed U.S. tariff impositions against Mexico and Canada," Han Ji-young, an analyst at Kiwoom Securities, said.

Blue chips gained ground across the board, with market heavyweight Samsung Electronics jumping 3.33 percent to 52,700 won and consumer electronics rival LG Electronics gaining 0.26 percent to 78,400 won.

Shipbuilders and financial shares also advanced. Hanwha Ocean soared 6.65 percent to 60,900 won while KB Financial climbed 2.82 percent to 91,300 won.

Gaming company Krafton added 0.69 percent to 362,500 won following news of a meeting between executives and OpenAI founder Sam Altman in Seoul to discuss potential cooperation.

Tech giant Kakao, however, fell 2.15 percent to 40,900 won despite announcing its partnership with OpenAI earlier in the day.

The local currency was trading at 1,462.9 won against the U.S. dollar at 3:30 p.m., up 4.3 won from the previous session. (Yonhap)