South Korean stocks closed 0.7 percent higher Wednesday as signs of a recovery in the U.S. economy eased concerns over a possible recession, analysts said. The local currency rose to a fresh one-year high against the U.S. dollar.

The benchmark Korea Composite Stock Price Index rose 13.61 points to 1,955.15. Trading volume was moderate at 493.9 million shares worth 4.16 trillion won ($3.76 billion), with gainers outpacing decliners 459 to 352.

“Good news from overseas markets boosted investor sentiment here,” said analyst Lim Su-kyun at Samsung Securities Co. “Particularly, upbeat corporate earnings and consumption data from the United States led the rally.” 

Expectations rose high that the world’s biggest economy can avoid the worst-case scenario and will make a turnaround soon, after U.S. big-name companies reported better-than-expected earnings and U.S. consumer spending rose for September, said Lim.

“These optimistic signs will likely make it possible for the U.S. Fed to implement the planned stimulus plans more easily,” the analyst added.

However, he noted that investors are still cautious ahead of the European summit meeting slated for Thursday, staving off further gains in the KOSPI.

Institutions scooped up a net 133.7 billion won worth of shares, and foreign investors bought 23.1 billion won.

Most shares finished in positive territory across the board, led by market heavyweights. (Yonhap News)