Seoul shares had their biggest gain in more than 1-1/2 years on Friday as Hyundai Motor and other exporters rallied after Fed Chairman Ben Bernanke avoided fuelling inflation concerns, calming worries over higher US interest rates.
Wall Street jumped, bolstering the confidence of investors in Asia, after a rough month in which markets have tumbled sharply because of the uncertain outlook for global interest rates.
South Korea's benchmark KOSPI rose 2.15 percent for the week, its first weekly gain in five. That marked a significant recovery after the index touched its lowest in more than seven months on Wednesday, leading some analysts to say the market appears to have found a bottom.
The benchmark Korea Composite Stock Price Index (KOSPI) rose 3.51 percent to end at 1,262.19, its biggest one-day percentage gain since advancing 4.12 percent on October 4, 2004. "The KOSPI's rebound could last until next week because most investors believe the worst is over," said Cho Seong-joon, an analyst at Meritz Securities.
The KOSPI had fallen nearly 17 percent since reaching a record high on May 11 as of Thursday's close. But speaking before the Economic Club of Chicago on Thursday, Bernanke said US inflation expectations had "fallen back somewhat" and that the impact of high energy prices on consumers had been limited.
Foreign investors reversed earlier net buying to end up selling a net 41.9 billion won ($43.90 million), data at 0630 GMT showed, their eighth consecutive session of net sales. Exporters gained, tracking a Wall Street rally that saw the Standard and Poor's 500 Index hit its biggest one-day gain in more than 2-1/2 years.
Hyundai Motor Co, the country's biggest auto maker, rose 5.01 percent to 77,600 won, while LG.Philips LCD Co Ltd rose 6.51 percent to 31,100 won. Chip makers also rose after the widely-tracked Philadelphia Stock Exchange's semiconductor index jumped 4.15 percent in US trade.
Samsung Electronics Co Ltd gained 3.25 percent to 571,000 won. Samsung Securities Co rose 4.35 percent to 49,150 won. The brokerage said its net profit in May rose nearly five-fold from a year earlier, despite sharp falls in South Korean markets last month. Shares in SK Corp jumped 6.55 percent to 60,200 won amid rumours South Korea's top oil refiner was seeking to acquire a foreign oil company.
Trade volume reached 227.5 million shares worth 3.5 trillion won compared to 196.3 million shares worth 2.9 trillion won on Thursday. Gainers trumped decliners by 660 to 114 with 48 titles ending flat. Institutional investors bought a net 228.3 billion won, while retail investors sold a net 227.5 billion won. The September KOSPI 200 futures index rose 6.15 points to 163.75,while the underlying KOSPI 200 spot index gained 5.69 points to 163.05. South Korea's junior and tech heavy Kosdaq market rose 1.98 percent to finish at 587.08.