Seoul shares closed up 1 percent on Monday, bolstered by futures-linked program-buying that drove select blue chips higher, but lingering concerns over South Korea's economic fundamentals dampened the prospects for a sustained market rally.
"Based on the economic fundamentals, it will be hard to maintain these gains," said Choi Seung-yong, a fund manager at Landmark Investment Trust.
"The upcoming earnings season is not looking promising," he added.
South Korean firms are scheduled to report third-quarter earnings soon after the country's three-day Chusok holiday early next week.
The benchmark Korea Composite Price Index (KOSPI) rose by 1.03 percent to close at 856.87 points.
Foreign investors purchased a net 101 billion won on the futures market, triggering a bout of program-buying that helped the KOSPI temporarily break through the 860-point mark.
Technology shares were among the day's leading gainers, with shares in LG Electronics Inc, the world's sixth-largest cell phone maker, rising 1.27 percent to end at 63,800 won.
The company announced late in the session it posted record monthly handset sales in August.
SK Telecom Co, South Korea's top mobile operator, added 1.39 percent to end at 182,000 won, while Hyundai Motor Co, the nation's largest auto maker, gained 1.25 percent to 56,700 won.
Shares in S-Oil Corp, South Korea's third-largest oil refiner, rose 8.93 percent to end at 59,800 won as investors bet robust demand for oil in global markets amid restricted supply will benefit companies in the sector. Shares in SK Corp, the nation's largest oil refiner, ended up 3.37 percent at 52,100 won, buoyed by the firm's announcement late last week it would buy back an undisclosed number of preferred shares.
Oil rose 1.34 percent to $46.20 a barrel in Asia trade, as Russia's YUKOS suspended some oil exports to China, the first sign of supply disruptions from its financial difficulties. But South Korea's major chip makers missed the market's rally.
Shares in Hynix Semiconductor Inc fell 2.28 percent to end at 10,780 won after South Korea's financial regulator said the firm had violated accounting rules between 1999 and 2003.
Shares in Samsung Electronics Co Ltd slid 0.1 percent to 469,000 won after the world's largest maker of memory chips predicted annual global semiconductor sales growth would fall by half in 2005.
Trade volume reached 332 million shares worth 2.2 trillion won compared to 837 million shares worth 2 trillion won on Friday.
Gainers edged out losers by 460 to 255 with 90 titles ending flat.
Foreign investors sold a net of 37.9 billion won in shares on the main bourse and retail investors sold a net 61.5 billion won. Institutional investors bought a net of 98 billion won in shares.
The December KOSPI 200 futures index rose 1.40 points to 111.05 and the underlying KOSPI 200 spot index added 1.06 points to 110.38.
The over-the-counter Kosdaq rose 0.51 percent to finish at 372.93.
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