Seoul shares closed higher on Monday, led by gains in POSCO on hopes steel shortages among Japanese auto makers would boost overall demand, while utilities also gained on optimism a strong won would cut fuel import costs. However, gains were capped due to concerns over the impact of a strengthening won on South Korean exports and after chip makers fell on a deteriorating sales outlook.
Investors shrugged off data showing an unexpected fall in industrial output in October from September, analysts said, awaiting instead export figures due on Wednesday.
"The market sentiment is not necessarily getting better," said Seo Jeong-kwan, an analyst at LG Investment & Securities. "There were gainers, but foreign exchange risks still weigh and investors have a wait-and-see attitude for the exports data."
The benchmark Korea Composite Stock Price Index (KOSPI) rose 0.85 percent to 865.40.
Steel makers led gainers amid expectations that tight supplies will boost profits. Shares in POSCO Co Ltd gained 2.12 percent to 193,000 won, after earlier hitting a new record high of 196,000 won.
Shares in Donguk Steel Mill Co Ltd surged 4.89 percent to 19,300 won, after it also hit a new record high of 19,700 won earlier in the session.
Oil refiners and utilities also gained on the strength of the won. Shares in state-run electricity provider, Korea Electric Power Corp, rose 5.67 percent to 26,100 won, after earlier hitting a yearly high of 26,500 won.
It was also helped by hopes for an electricity tariff increase next year.
Shares in the nation's top refiner SK Corp surged 4.96 percent to a new record high of 65,600 won.
Downgrades by foreign brokerages pushed down shares in Samsung Electronics Co Ltd, the world's largest maker of memory chips, down 1.62 percent to 426,000 won.
It hit its lowest level in over 3 months earlier in the session.
Concerns about the impact of a stronger won weighed on Hyundai Motor Co, the country's top auto maker, which fell 2.86 percent to 51,000 won, dragged down further by fears a steel shortage will increase costs.
The South Korean won ended a touch weaker against the dollar, but still close to a seven-year high.
Trade volume was 315.9 million shares worth 2 trillion won, compared to 309.8 million shares worth 2.4 trillion won on Friday. Gainers edged out losers by 444 to 286 with 69 titles ending flat.
Foreign investors sold a net of 94.5 billion won in shares on the main bourse, while retail investors bought a net of 122.8 billion won.
Institutional investors sold a net of 13.3 billion won.
The December KOSPI 200 futures index rose 1.15 points to 111.95 and the underlying KOSPI 200 spot index gained 0.94 point to 111.62.
The over-the-counter Kosdaq gained 0.19 percent to finish at 370.26.