Seoul shares hit an all-time high on Tuesday, lifted by hefty foreign buying of blue chips including Kookmin Bank and Hyundai Motor, amid optimism over the outlook for the local economy and corporate earnings.
Chip makers such as Samsung Electronics Co Ltd also ended higher, erasing earlier losses, as initial worries over higher oil prices eased.
Investor optimism about the domestic economy was fanned after the country's central bank forecast economic growth would accelerate to 5.0 percent in 2006 from an expected 3.9 percent this year.
The benchmark Korea Composite Stock Price Index hit a record high 1,324.22 late in the session, rebounding from a session bottom of 1,304.88.
The index ended up 0.45 percent at 1,321.06.
"Sentiment is very strong and is being supported by recent robust economic indicators from overseas as well as at home," said Lim Chang-gue, a fund manager at Samsung Investment Trust Management.
"In terms of confidence, I think it's a good signal that foreign investors are buying even with the KOSPI at this level," he added.
Foreign investors snapped up a net 56.1 billion won worth of local shares by late afternoon, bringing their total buying over the past three sessions to some 527 billion won ($508.4 million).
The KOSPI index has now settled above the key psychological level of 1,300 points for the past four sessions and ended higher for the past five days.
Kookmin Bank, the country's top lender, rose 3.67 percent to end at an all-time high of 70,700 won.
Shares in South Korea's top auto maker, Hyundai Motor Co, surged 5.87 percent to 97,400 won, after earlier hitting a record high of 98,600 won, boosted by signs of stronger sales both at home and abroad.
Semiconductor shares, which have spearheaded the market's recent rally, extended gains into a fifth session on Tuesday.