Seoul shares rose for the third consecutive session on Monday, led by export-oriented technology firms such as Samsung Electronics, on hopes the US Federal Reserve would soon end its campaign of interest rate increases.
But broader gains were capped as shares in Hyundai Motor Co and its affiliates dropped after prosecutors raided their offices in a probe that local media said was tied to lobbying.
South Korean prosecutors barred some officials from Hyundai Motor and other affiliates from leaving the country for questioning over the probe, a prosecution official said on Monday.
The benchmark Korea Composite Stock Price Index (KOSPI) rose 0.69 percent to end at 1,330.34.
US stocks gained on Friday on hopes the Fed would soon end its tightening campaign after data showed new home sales saw their biggest plunge in nearly nine years in February, signalling a significant slowing in the housing market.
"There are now expectations that US interest rates will not increase as much. If it's true that could give the market a relief rally," said Kim Yung-min, an equity strategist at Korea Investment Trust Management.
"We are also seeing a rebound in the IT sector because of the recent correction period," he added.
The United States is South Korea's largest trading partner after China.
Samsung Electronics Co Ltd rose 2.46 percent to 624,000 won. Shares in the world's biggest maker of memory chips were also lifted on speculation that Samsung would soon undertake a share buyback.
Citigroup said in a note to clients it expects Samsung will buy back shares before June in order to support the stock price amid expectations for lacklustre earnings.
Hynix Semiconductor Inc, the world's second-biggest memory chip maker, rose 3.39 percent to 27,450 won.
Shares in Hynix and Samsung fell to their lowest close since mid-December last week after software giant Microsoft Corp delayed the consumer launch of its new operating system until after the Christmas holiday shopping period.
LG Electronics Inc, the world's fourth-biggest maker of mobile phones, rose 2.41 percent to 76,500 won.
Lenders extended a rally amid expectations for consolidation in the country's financial sector after Kookmin Bank agreed last week to buy smaller rival Korea Exchange Bank (KEB) for $6.6 billion, marking the country's largest acquisition.
Kookmin rose 1.94 percent to 84,200 won, after earlier hitting a record 84,500 won, touching its third consecutive all-time high in as many sessions.
Shares in wireless operators rose as investors bet firms would be conservative following the re-introduction on Monday of regulations that would allow operators to provide subsidies when certain subscribers buy new handsets.
KTF Co Ltd, the country's third-biggest mobile services provider, rose 2.59 percent to 25,750 won.
However, affiliates of the Hyundai Motor Group dropped, with Hyundai Motor, South Korea's biggest auto maker, ending down 2.58 percent at 79,300 won, after earlier dropping as much as 4.2 percent.
South Korean media reports said the investigation involved a local businessman and was linked to a probe into lobbying of government officials.
Kia Motors Corp, the country's second-biggest auto maker, fell 2.21 percent to 19,950 won.
Shares in car shipping firm and Hyundai affiliate Glovis Co Ltd fell by their daily limit of 15 percent to 39,950 won, their lowest since making their trading debut on December 26. Glovis CEO Lee Ju-eun has been detained for questioning over the case, a prosecution official said on Monday.
Auto parts maker Hyundai Autonet fell 11.11 percent to 9,200 won. Shares in LG Card Co Ltd fell 2.2 percent to 53,400 won with investors locking in gains following a 16 percent advance in the past two sessions as creditors prepare to kick off the sale process of the country's biggest card issuer on Monday.
Trade volume reached 314.3 million shares worth 3 trillion won data at 0700 GMT showed, compared to 368.5 million shares worth 3.3 trillion won on Friday. Decliners tied gainers with 371 each, with 75 titles ending flat.
Foreign investors bought a net 81.6 billion won in shares on the main bourse, while institutional investors bought a net 122.4 billion won. Retail investors sold a net 197.2 billion won.
The June KOSPI 200 futures index rose 1.85 points to 173.10, while the underlying KOSPI 200 spot index added 1.58 points to 172.44. South Korea's junior and tech heavy Kosdaq market edged up 0.05 percent to finish at 644.87.