Tokyo stocks closed higher Wednesday as investors snapped up issues on dips deemed undervalued, but gains were capped by ongoing geopolitical tensions on the Korean Peninsular.

The 225-issue Nikkei Stock Average gained 49.28 points, or 0.25 percent, from Tuesday to end the day at 20,081.63.

The broader Topix index of all First Section issues on the Tokyo Stock Exchange, meanwhile, closed 8.93 points, or 0.55 percent, higher at 1,618.63.

Iron and steel, machinery and transportation equipment-linked stocks comprised those that gained the most by the end of trade, and advancing issues outpaced declining ones by 1,329 to 550 on the First Section.

Trading volume on the main section on Wednesday came to 1,794.61 million shares, dropping from Tuesday's volume of 1,857.72 million shares.

The turnover on the third trading day of the week totaled 2,450.3 billion yen (21.67 billion U.S. dollars).