Stocks close higher on hopes for China's economic recovery

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 2,427.85 points on Thursday, up 15.00 points, or 0.62 percent, from the previous trading day. [YONHAP]

Stocks closed higher Thursday, snapping a two-day losing streak, as data suggesting China's economic recovery from the Covid-19-driven slowdown helped spur investor appetite for risky assets. The local currency rose against the dollar.

The benchmark Kospi advanced 15 points, or 0.62 percent, to close at 2,427.85. Trading volume was moderate at 422.3 million shares worth 9.48 trillion won ($7.3 billion), with gainers outpacing decliners 495 to 389.

"The January manufacturing data in China came as a surprise, which gave a boost to the anticipation of an economic recovery in China following its Covid-19 reopenings," said Han Ji-young, an analyst at Kiwoom Securities.

But selling pressure is still strong on worries that the U.S. Federal Reserve will likely stick to its aggressive interest rate hikes for some time, Han said.

Data released Wednesday showed that the manufacturing activity in Asia's largest economy posted its highest improvement in more than a decade in February, with the services sector also showing a strong performance.

China, Korea's biggest trading partner, reopened the economy in November last year in an easing of Covid-19 restrictions.

In Seoul, steelmakers and energy companies led the Kospi's gain.

Steel maker Posco Holdings shot up 5.87 percent to 337,000 won on growing expectations it will benefit from China's Covid-19 reopening. Refiner SK Innovation spiked 6.93 percent to 160,500 won.

Samsung Electronics rose 0.33 percent to 60,800 won, and battery maker LG Energy Solution gained 2.29 percent to 535,000 won.

IT firms lost ground. Internet portal provider Naver dropped 1.2 percent to 206,000 won, and Kakao fell 1.92 percent to 61,200 won.

The local currency ended at 1,315.6 won against the dollar, down 7 won from Tuesday's close.

Bond prices, which move inversely to yields, closed lower. The yield on three-year government bonds rose 9.5 basis points to 3.890 percent, and the return on the benchmark 10-year government bonds climbed 7.1 basis points to 3.993 percent.

Local financial markets were closed Wednesday for the March 1 Independence Movement holiday, marking a 1919 uprising against Japan's colonial rule.

BY SOHN DONG-JOO, YONHAP [sohn.dongjoo@joongang.co.kr]