South Korean stocks rose for the fourth day on Thursday as investors picked up shipyard and steel shares including POSCO, bolstered by overnight rallies in U.S. markets, analysts said. The local currency appreciated against the U.S. dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) jumped 40.22 points, or 2.29 percent, to 1,799.72. Volume was moderate at 389.99 million shares worth 5.8 trillion won (US$6.6 billion), with winners outnumbering losers 565 to 219.

"Investor jitters seemed to be easing after U.S. Fed Chairman Ben Bernanke recently hinted at a possible federal fund rate cut by saying he will use every possible means to contain the crisis arising from unstable property markets," said Han Yo-seop, an analyst at Daewoo Securities.

South Korean stocks were pummeled late last week by fears of a credit crunch arising from worsening U.S. property markets. The main index gave up more than 10 percent on Thursday and Friday, wiping out around 90 trillion won in market capitalization, but since the start of this week it has recouped 80 percent of its
losses.

Most blue-chip shares closed higher with shipyard and steel companies chalking up solid gains.

No. 1 shipbuilder Hyundai Heavy Industries surged 9.63 percent to 330,000 won, while smaller player Samsung Heavy Industries jumped 4.89 percent to 42,900 won.

Steelmaking and construction firms were also among the top performers. Steelmaking giant POSCO climbed 5.2 percent to 526,000 won on forecasts of steel price hikes and increasing demand. The nation's largest builder Daewoo Engineering & Construction gained 1.28 percent to 27,650 won and smaller Hyundai Engineering & Construction rose 4.35 percent to 72,000 won.

On Wednesday, U.S. stocks advanced on fresh corporate deal news and mounting expectations of a rate cut by the Federal Reserve. The Dow Jones industrial average rose 1.11 percent and the tech-heavy Nasdaq composite index climbed 1.25 percent.

The local currency closed at 941.6 won to the greenback, up 2.5 won from Wednesday's close, as offshore investors unloaded the dollar, dealers said.

Bond prices, which move inversely to yields, closed sharply lower. The return on benchmark three-year Treasuries jumped 0.03 percentage point to 5.31 percent, and the yield on five-year government bonds rose 0.03 percentage point to 5.36 percent.

(Yonhap)