Seoul shares rose to their highest close in nine weeks on Friday as exporters such as LG.Philips LCD gained on hopes for a pause in US interest rate increases, while financial firms recovered from recent losses.
State-run Industrial Bank of Korea rose 3.96 percent to 17,050 won after it said net profit rose a better-than-expected 2.5 percent in the second quarter from a year earlier.
The gains came ahead of a crucial week in which the Federal Reserve will decide on Tuesday whether it suspends its two-year rate-rise cycle and the Bank of Korea will meet on Thursday, with analysts evenly split about the outlook for domestic rates.
The benchmark Korea Composite Stock Price Index (KOSPI) rose 0.96 percent to end at 1,304.51, booking its highest close since June 2. Despite climbing 3.9 percent over the past three weeks, the KOSPI is still down 5.4 percent for the year - making it the worst-performing major index in the region - and down 10.9 percent since hitting a lifetime high on May 11.
Foreign investors have been heavy sellers since May, unloading a net 8.3 trillion won ($8.61 billion) as of Friday's close. Exporters extended this week's gains, with Samsung Electronics Co Ltd rising 0.82 percent to 615,000 won and flat panel maker LG.Philips LCD Co Ltd up 2.16 percent at 35,500 won.
Banks also recovered from heavy losses this week that had been caused by worries about falling net interest margins and about a slowdown in South Korea's economy. Data on Thursday showed consumer sentiment at a 1-1/2 year low.
Kookmin Bank, the country's biggest lender, rose 1.66 percent to 79,500 won.
Other financials also rose, with LG Card Co Ltd up 3.48 percent to 50,500 won, recovering from recent losses. Binding bids for South Korea's top credit card issuer are due on Thursday.
Trade volume reached 185.6 million shares worth 2.4 trillion won compared to 182.4 million shares worth 2.9 trillion won on Thursday. Gainers trumped decliners by 444 to 290 with 91 titles ending flat.
Foreign investors sold a net 146.1 billion won in shares on the main bourse, while retail investors sold a net 94.5 billion won. Institutional investors bought a net 197.2 billion won.
The September KOSPI 200 futures index rose 1.10 points to 170.05, while the underlying KOSPI 200 spot index gained 1.74 points to 169.68. South Korea's junior and tech heavy Kosdaq market rose 0.66 percent to finish at 549.75.
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