South Korean stocks closed 1.96 percent higher Thursday on strong foreign buying fed by optimism over a global economic recovery, analysts said. The local currency rose against the U.S. dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) shot up 37.33 points to 1,907.13. Trading volume was moderate at 483.1 million shares worth 6.32 trillion won ($5.60 billion) with advancers outstripping decliners 592 to 234.

"Foreigners snapped up blue chips. China's steady consumer prices and hopes for further easing in the United States also fueled the gains," said Kim Chul-joong, an analyst at Korea Investment & Securities Co.

China's consumer prices grew at a slower pace of 1.8 percent on-year in July. The expectations for the Federal Reserve to initiate a third round of quantitative easing have risen in Washington amid a slowing economy.

Foreign investors scooped up a net 1.6 trillion won, the largest daily net purchase since July 8 last year, giving a boost to the KOSPI.

Blue chips finished sharply higher, leading the gain. Top-cap Samsung Electronics rose 1.52 percent to 1,340,000 won, with No. 3 lender Hana Financial surging 3.38 percent to 36,700 won.

Top automaker Hyundai Motor jumped 3.39 percent to 244,000 won and STX Offshore & Shipbuilding, the No. 4 shipbuilder, skyrocketed 7.12 percent to 4,290 won.

In contrast, NHN Corp., a major Web search engine operator, fell 0.19 percent to 263,500 after it logged lackluster earnings for the second quarter.

The local currency ended at 1,125.50 won against the greenback, up 2.8 won from Wednesday's close, on the back of strong foreign buying, dealers said.

(Yonhap News)