The South Korean stocks rose for the third straight day on Thursday as foreigners increased holdings of local stocks.

The benchmark Korea Composite Stock Price Index (KOSPI) gained 9.44 points, or 0.40 percent, to settle at 2,375.84. Trading volume stood at 290.54 million shares worth 4.59 trillion won (4.1 billion U.S. dollars).

Tensions de-escalated on the Korean Peninsula as the Democratic People's Republic of Korea (DPRK) and the United States halted the war of words that had created the security crisis the region.

Following the DPRK's tests in July of what it called an intercontinental ballistic missile (ICBM), U.S. President Donald Trump warned Pyongyang of "fire and fury."

In response, the DPRK warned the missile strike on the waters off the U.S. island of Guam in the Pacific.

The escalated tensions eased as the DPRK delayed the missile strike against the sea near the U.S. territory, while Trump praised it as a "wise and well reasoned" decision.

Foreigners were net buyers in the stock market for the third consecutive day, leading to the KOSPI's recent gain.

Local institutions purchased a net 120 billion won worth of stocks, but individual investors sold shares worth 168 billion won.

Market bellwether Samsung Electronics inched up 0.1 percent as it unveiled a new flagship smartphone Galaxy Note 8 in New York overnight. Memory chip giant SK Hynix rose 0.2 percent, and leading chemical firm LG Chem added 2.5 percent.

The biggest auto parts maker Hyundai Mobis gained 0.6 percent, but top automaker Hyundai Motor declined 2.1 percent. The No.1 steelmaker POSCO lost 0.2 percent, and the most-used search engine Naver fell 0.3 percent.

South Korea's currency finished at 1,127.9 won against the greenback, up 3.9 won from the previous close.

Bond prices ended mixed. Yields on the liquid three-year treasury notes rose 0.4 basis points to 1.801 percent, but the return on the benchmark 10-year government bonds lost 0.8 basis points to 2.289 percent.