Seoul shares expanded gains late Thursday morning as investors scooped up large-cap stocks on bargain hunting despite concerns over artificial intelligence (AI) spending and uncertainty over the Federal Reserve's rate outlook.

After opening 0.33 percent higher, the benchmark Korea Composite Stock Price Index (KOSPI) expanded its gains, trading 173.49 points, or 3.06 percent, higher at 5,836.73 as of 11:20 a.m.

On Wednesday, the index plunged 5.98 percent to close at 5,663.24, following a 10.84 percent decline the previous session.

Overnight, the Dow Jones Industrial Average fell 2.19 percent, while the tech-heavy Nasdaq Composite declined 1.74 percent.

The Fed on Wednesday (U.S. time) left its benchmark interest rate unchanged at 3.5-3.75 percent, marking a fifth consecutive pause.

The U.S. central bank offered little new guidance on the future path of interest rates, leaving investors with greater uncertainty.

Institutions and foreigners bought a net 1.42 trillion won (US$983 million) and 554 billion won worth of stocks, respectively. Individuals sold a net 1.97 trillion won.

Large-cap stocks were mixed.

Market bellwether Samsung Electronics surged 5.5 percent, and top carmaker Hyundai Motor climbed 1.27 percent.

Defense giant Hanwha Aerospace jumped 12.35 percent, and LIG Defense & Aerospace advanced 7.42 percent.

Among decliners, Samsung Electronics' chipmaking rival SK hynix fell 1.28 percent, and No. 1 home appliance maker LG Electronics declined 0.4 percent.

Internet giant Naver retreated 0.89 percent, and budget carrier Air Busan dropped 1.15 percent.