South Korean shares ended the year's first trading session at an all-time high on Monday as blue chips, such as Hyundai Motor Co, and technology firms gained on expectations for better earnings.
But further gains were limited by weaker overseas markets amid higher oil prices and declines in some bank shares including Kookmin Bank.
The benchmark Korea Composite Stock Price Index closed up 0.72 percent at an intraday high of 1,389.27, which was also the highest on record.
The junior tech-heavy Kosdaq jumped a bigger 3.6 percent to end at 727.07.
"A lot of money has flowed into stock investment funds as data showed a sustained economic recovery and as corporate earnings had hit the bottom last year," said Lee Seung-mun, a fund manager at Midas Asset Management.
"Corrections in US and Japanese stocks, if not big, will not affect the local market in a short term as funds are flowing in even stronger," he added.
South Korea's service sector output index rose a seasonally adjusted 0.7 percent in November on the month after a revised 0.3 percent gain in October, data showed late last week.
Hyundai Motor closed up 1.13 percent at 98,400 won and its affiliate Kia Motors Corp, the country's No 2 auto maker, surged 5.46 percent to 28,000 won.
Hyundai said on Monday it aimed to sell 15 percent more vehicles in 2006 than in 2005 because of greater demand. It also said Kia aimed to sell 17 percent more. Hyundai also said later its total sales in December rose 9 percent from a year ago, with Kia's sales up 4 percent.
Chipmakers advanced as explosive demand for NAND flash memory chips, used in hot-selling digital cameras and music players, has eased worries of weaker outlook for mainstay dynamic random access memory (DRAM) and boosted investor confidence.
Hynix Semiconductor Inc, the world's second-largest memory chip maker, jumped 6.52 percent to 37,600 won. Some analysts have said major technology companies, led by memory chip makers, will replace financials as the best-performing South Korean stocks in 2006. Many tech shares on the junior Kosdaq market also rose, with LG Telecom Co Ltd up 4.97 percent to end at 6,970 won.
Among other winners, shipbuilder Hanjin Heavy Industries Co rose 4.89 percent to 24,650 won after the company provided a better outlook for earnings.
Brokerages and insurers gained as investors continued to bet government moves to relax regulations to let them sell a wider range of financial products would boost their earnings.
Top non-life insurer Samsung Fire and Marine Insurance Co Ltd gained 4.69 percent to 134,000 won. Samsung Securities Co advanced 1.61 percent to 63,100 won and Woori Investment and Securities Co, the biggest brokerage by market share, rose 4.13 percent to 26,450 won.
But some banks lost amid caution about earnings. Kookmin Bank, South Korea's top lender, fell 1.44 percent to 75,400 won.
South Korea's big banks, including Kookmin, expect tougher times in 2006 as competition for wealthy clients heats up, chief executives said in New Year's remarks.
Among other decliners, Korea Electric Power Corp, the state-run power provider, dropped 1.59 percent to 37,200 won on worries about earnings at energy cost-sensitive companies after oil prices rose above $61 per barrel.
Trade volume reached 388 million shares worth 4.6 trillion won, compared with 446 million shares worth 5.4 trillion won on Thursday. Gainers outnumbered decliners by 430 to 327 with 56 titles ending flat.
Foreigners bought a net 17.1 billion won ($16.93 million) worth on the main board while local institutions sold a net 204.3 billion won. Retail investors purchased a net 210.4 billion won.
The March KOSPI 200 futures index rose 0.8 point to 178.15, while the underlying KOSPI 200 spot index advanced 0.86 point to 178.29.
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