Seoul shares added 0.75 percent on Friday as POSCO rose on speculation the steel maker had agreed to expand ties with Japan's Nippon Steel, while builders gained on potential government measures to support the construction sector.
The benchmark Korea Composite Stock Price Index (KOSPI) index was up 1.16 percent on the week, marking its first weekly gain in three.
Recently battered stocks also recovered on stronger US markets, with the Dow Jones industrial average at another record, helping improve confidence over the outlook for US economic growth and earnings for South Korean exporters.
LG.Philips LCD Co Ltd rose 2.26 percent to 29,450 won after falling 3.4 percent over the prior three sessions. But electronics parts maker Samsung Electro-Mechanics Co dropped 2.12 percent to 39,300 won after posting worse-than-expected results in the third quarter.
The KOSPI rose 0.75 percent to end Friday at 1,364.24 points but is still down some 0.73 percent since North Korea first announced it was preparing a nuclear test early this month. "The US markets continue to get stronger, while the impact of the North Korea nuclear test is beginning to fade a little," said Jason Hwang, strategist at Woori Investment and Securities.
Steel makers gained after a media report that Nippon Steel Corp had agreed to expand capital and business ties with South Korea's POSCO Co Ltd, the world's no. 5 steel maker by market value. A tie-up could help POSCO's competitiveness, as well as boost bargaining power over raw material producers, analysts have said, although it would reduce the potential for take-overs that helped shore up share prices in the sector recently. POSCO shares rose 1.95 percent to 261,000 won.
Trade volume reached 264.4 million shares worth 3.1 trillion won compared to 295.2 million shares worth 2.9 trillion won on Thursday. Gainers trumped decliners by 506 to 250 with 76 titles ending flat.
Foreign investors sold a net 166.4 billion won in shares on the main bourse. Retail investors bought a net 77.6 billion won, while institutional investors bought a net 69.7 billion won.
The December KOSPI 200 futures index rose 1.35 points to 178.65, while the underlying KOSPI 200 spot index gained 1.24 points to 177.35. South Korea's junior and tech heavy Kosdaq market rose 0.90 percent to finish at 582.65.