South Korean shares shot up over 2 percent Tuesday as investors were buoyed by growing hopes that the U.S. Federal Reserve may carry out rate cuts this year. The local currency gained against the U.S. dollar.

The benchmark Korea Composite Stock Price Index jumped 57.73 points, or 2.16 percent, to close at 2,734.36.

Trading volume was moderate at 523 million shares worth 10.9 trillion won ($8 billion), with winners outpacing losers 582 to 285.

Investor sentiment was boosted by growing hope that the Fed may start slashing key rates this year, following reports the non-farm payroll growth slowed to 175,000 in April in the United States.

"The KOSPI was able to land over the 2,700 level on the back of gains from Wall Street over the South Korean holiday," said Han Ji-young, an analyst at Kiwoom Securities.

The local financial market was closed the previous day, the alternative holiday for Children's Day.

Foreign investors purchased a net 110 billion won worth of local shares, extending their buying spree to a sixth consecutive session. Retail investors offloaded a net 183 billion won, while institutions bought a net 77.4 billion won.

Tech giant Samsung Electronics jumped 4.77 percent to 81,300 won, and No. 2 chipmaker SK hynix soared 3.7 percent to 179,600 won. Battery maker LG Energy Solution climbed 0.13 percent to 391,500 won.

Carmakers finished bullish as well, with Hyundai Motors rising 0.41 percent to 242,000 won and its sister company Kia gaining 1.58 percent to 115,700 won. Auto parts maker Hyundai Mobis climbed 1.11 percent to 228,500 won.

Financial firms were also among the major winners, with Samsung Life Insurance advancing 5.37 percent to 88,300 won and KB Financial moving up 0.27 percent to 73,900 won.

No. 1 pharmaceutical giant Samsung Biologics added 2.86 percent to 194,400 won, and Celltrion increased 2.86 percent to 194,400 won.

The local currency closed at 1,360.1 won against the greenback, up 2.7 won from the previous session's close. (Yonhap)