The benchmark KOSPI rose 49.90 points or 0.73 percent to close at 6,856.83.
The modest gain followed another volatile session. The index opened 0.56 percent lower at 6,769.06, climbed to an intraday high of 6,979.92 and later fell to 6,448.86 before recovering into the close, a swing of more than 530 points.
Foreign investors bought 952.3 billion won worth of shares, while institutions purchased 3.22 trillion won. Individuals sold 4.14 trillion won.
Semiconductor heavyweights led the rebound. Samsung Electronics gained 3.34 percent to 263,000 won, while SK hynix rose 3.69 percent to 1,913,000 won. SK Square, the chipmaker's largest shareholder, added 2.50 percent.
The gains came despite weakness in artificial intelligence (AI)-related semiconductor shares overseas. SK hynix's American depositary receipts (ADRs) fell more than 9 percent overnight in New York, while Japanese memory-chip maker Kioxia fell as much as 6 percent.
Among other large-cap stocks, Hyundai Motor fell 4.39 percent, KB Financial dropped 3.33 percent, Samsung Life Insurance lost 2.76 percent, Samsung Biologics declined 2.29 percent and LG Energy Solution slipped 1.98 percent.
Hyundai Pharm surged 29.84 percent to its daily limit after President Lee Jae Myung said during a Cabinet meeting that the government should consider allowing medication abortion. The company holds Korean distribution rights for a combination drug containing mifepristone and misoprostol that is awaiting regulatory approval.
Shipping and energy-related shares also advanced as oil prices remained elevated amid renewed tensions surrounding the Strait of Hormuz. STX Green Logistics surged 29.92 percent to its daily limit, Heung-A Shipping gained 4.46 percent and Heunggu Oil rose 8.93 percent.
The KOSDAQ, however, failed to join the rebound, falling 15.38 points, or 1.92 percent, to close at 783.98. The junior index briefly climbed above the 800 mark before falling to an intraday low of 749.76, its lowest level in more than a year.
Foreign investors sold 247.2 billion won worth of KOSDAQ shares, while individuals and institutions bought 72.9 billion won and 158.7 billion won, respectively.
The Korea Exchange activated a sell-side sidecar at around noon after the KOSDAQ 150 futures contract fell 6.08 percent and the KOSDAQ 150 index dropped 6.25 percent, exceeding regulatory thresholds for more than one minute.
It was the 20th KOSDAQ sidecar this year, surpassing the previous annual record of 19 set during the 2008 global financial crisis. The intervention came a day after both a sell-side sidecar and a circuit breaker were triggered on the junior market.
Among major KOSDAQ stocks, Alteogen tumbled 11.7 percent, while semiconductor equipment makers VM and PSK gained 19.0 percent and 10.2 percent, respectively.
The won strengthened 0.43 percent to 1,493.10 per dollar.
Oil prices remained elevated after U.S. President Donald Trump announced plans to reinstate maritime restrictions targeting Iranian shipping. West Texas Intermediate crude traded around $80 a barrel, while Brent crude hovered near US$85.
Japan's Nikkei 225 gained 0.7 percent, China's Shanghai Composite rose 1.4 percent and Hong Kong's Hang Seng Index added 0.6 percent.
Later this week, investors will turn their attention to U.S. June consumer price data and earnings from major U.S. banks including JPMorgan Chase, Goldman Sachs and Bank of America.
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