South Korea's stock market may rebound next week as the key rate cut by the European Central Bank (ECB) could prompt foreign investors to buy local shares, analysts said Saturday.

The ECB cut its benchmark rate by a quarter percentage point to 0.5 percent earlier this week, adding to hopes for an economic stimulus in Europe.

European investors have gone on buying sprees on the Seoul bourse for two to three months in the past when the European Central Bank has lowered its benchmark rate.

The benchmark Korea Composite Stock Price Index (KOSPI) closed at 1,965.71 on Friday, up 1.08 percent from a week earlier.  

Han Chi-hwan, an analyst at KDB Daewoo Securities Co., said there is a high possibility that a recovery trend of the KOSPI could persist next week, adding improved liquidity could give a boost to financial firms.

Foreign investors and retail investors offloaded shares worth 270.4 billion won ($246 million) and 300.4 billion won, respectively. Meanwhile, institutions purchased a net 668.7 billion won worth of shares. (Yonhap News)