South Korean shares posted their biggest one-day percentage gain in two weeks on Monday, as Kookmin Bank and other stocks sensitive to the local economy rose on improving consumer sentiment data.
Exporters such as Samsung Electronics Co Ltd climbed on better-than-expected US jobs data, helping local shares rebound from a three-day losing streak.
"The consumer sentiment data is a reminder of the strong expectations for an economic recovery," said Lim Chang-gue, a fund manager at Samsung Investment Trust Management.
The benchmark Korea Composite Stock Price Index (KOSPI) rose 2.18 percent to end at 1,227.18, its biggest one-day percentage gain since climbing 2.6 percent on September 26.
Domestic institutions, viewing a recent sell-off as overdone, accounted for the bulk of the day's buying, helping offset a 12th consecutive session of foreign selling.
Foreign investors have unloaded a net 1.8 trillion won ($1.73 billion) worth during that period.
Lenders led the market higher after data released early on Monday showed South Korea's key consumer sentiment index rose in September for the first month in six.
Top lender Kookmin Bank rose 4.62 percent to 61,100 won, while third-ranked Woori Financial Group surged 7.38 percent to 16,000 won.
Woori's chief executive said on Monday third quarter earnings at Woori Bank, the lending arm of the financial services provider, were set to top the second quarter's net profit. Lenders were also boosted as the consumer sentiment data cemented expectations that the central bank would raise interest rates on Tuesday for the first time in over three years.
A single rate hike could help improve interest margins at lenders, without significantly raising borrowing costs for consumers, analysts said. Most economists surveyed by Reuters expect only one rate increase before the end of 2005.
Other financial stocks rose, with Samsung Fire and Marine Insurance Co Ltd gaining 4.78 percent to 103,000 won on expectations for rising investment yields.
Department store operators also rose on the positive data, with third-ranked Shinsegae Co Ltd climbing 2.09 percent to 390,500 won. The operator of the local E-mart discount chain also reported on Monday a 12.8 percent rise in sales in September from a year ago.
Meanwhile, exporters gained after a report on Friday showed the US economy shed 35,000 jobs in September, fewer than feared despite the impact from Hurricane Katrina.
"The US jobs data was not as bad as some had expected. Besides inflation, the US economy looks like it will be okay," said Lim at Samsung Investment.
Samsung Electronics, the world's biggest maker of memory chips, rose 2.07 percent to 593,000 won.
Flat panel maker LG.Philips LCD Co Ltd rose 2.03 percent to 45,150 won, ahead of its quarterly earnings results due on Tuesday.
The United States accounts for around one-fifth of South Korea's total exports.
South Korea's junior and tech heavy Kosdaq market rose 2.26 percent to finish at 603.85, its best close since ending at 616.1 on July 23, 2002.
Trade volume reached around 435 million shares worth 4 trillion won compared to 498.3 million shares worth 4 trillion won on Friday. Gainers far outnumbered decliners by 606 to 173, with 42 titles ending flat.
Foreign investors sold a net 108.4 billion won in shares on the main bourse, data at 0645 GMT showed, while institutional investors bought a net of 380.8 billion won. Retail investors sold a net of 312.6 billion won
The December KOSPI 200 futures index rose 3.30 points to 158.15 and the underlying KOSPI 200 spot index added 3.42 points to 157.82.