South Korean stocks added 1.14 percent Friday, as investor sentiment buoyed on signs of improvement in advanced economies, analysts said. The local currency sharply gained against the U.S. dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) closed up 21.04 points to 1,870.16. Trading volume was moderate at 368 million shares worth 3.82 trillion won (US$3.42 billion) with gainers outpacing losers 609 to 188.

Market watchers said Seoul shares recouped losses made in the previous trading session on improved economic indicators from China, the United States and the eurozone.

The KOSPI dropped 0.98 percent on Thursday as the U.S. Federal Reserve's minutes reaffirmed a gradual scaling-back of its bond-buying program.

British bank HSBC said the Purchasing Managers Index (PMI) for China's manufacturing sector reached to a four-month high at 50.1 in August. China is the biggest trading partner of South Korea.

The PMI is an index that measures the health of a country's manufacturing sector. A reading of 50 or above represents an expansion of the sector from the previous month, while a reading below the figure represents a contraction.

The composite PMI for the eurozone also came to 51.7 in August, which marked the highest level in 26 months.

Meanwhile, the U.S. also posted an improved jobs data, with its composite leading index of economic activity rising 0.6 percent in July.

"The local stock market gathered ground tracking overnight gains in the U.S. and eurozone markets," said Bae Sung-young, a researcher at Hyundai Securities Co. "China's better-than-expected PMI for August also eased woes from the future U.S. moves in its quantitative easing."

Foreigners bought more shares than they sold at a net 102.4 billion won. In contrast, individuals and institutions offloaded a net 26.7 billion won and 69 billion won, respectively.

Tech shares closed higher, with market behemoth Samsung Electronics rising 3.19 percent to 1,295,000 won and top chipmaker SK hynix gaining 1.6 percent to 28,500 won. Flat panel maker LG Display added 2.13 percent to 28,800 won.

Carmakers also gathered ground, with Hyundai Motor adding 0.22 percent to 228,500 won and its smaller affiliate Kia Motors rising 0.32 percent to 62,600 won. Auto parts maker Hyundai Mobis climbed 2.28 percent to 269,500 won.

Builders closed bullish, with Hyundai Engineering & Construction adding 0.74 percent to 54,500 won and Daelim Industrial rising 0.24 percent to 83,400 won. Top steelmaker POSCO gained 0.16 percent to 321,000 won.

The local currency ended at 1,116.90 won against the greenback, up 6.10 won from Thursday's close, as exporters offloaded U.S. dollars, dealers said. (Yonhap News)