South Korean stocks are expected to gather ground this week, allaying concerns on a sudden liquidity squeeze as U.S. Federal Reserve Chairman Ben Bernanke reassured that a loose monetary policy would be kept, analysts said.

The benchmark Korea Composite Stock Price Index closed at 1,869.98 on Friday, up 2 percent from the previous week. The main bourse moved in rangebound earlier in the week, as investors stayed on the sidelines ahead of Bernanke’s speech.

After the Fed chairman’s remarks backing the $85 billion-a-month bond purchase program, the KOSPI rallied 2.93 percent on Thursday, boosted by strong rebounds in large-cap shares.

This week, the U.S. is due to release consumption, real estate and production data, which are predicted to have improved from the previous results, adding momentum to the stock market.

“Expectations are high over improved consumption data from Washington. That will likely lend support to fueling the local stocks, along with more hopes for corporate earnings,” said Han Chi-hwan, an analyst at KDB Daewoo Securities Co.

But China’s second-quarter growth data, due to come out on Monday, may weigh down the KOSPI as it is projected to have slowed down from the 7.7 percent on-year expansion three months earlier, Han added.

“Eyes will then be on what Bernanke says in his semi-annual policy report to the House later in the week,” he said.

Last week, foreigners sold off 19 billion won ($16.9 million), while institutions and retail investors scooped up a combined net 1.2 trillion won.

Steelmakers and tech firms were the biggest winners, rising 5.3 percent and 3.2 percent, respectively. But foodmakers lost 2.3 percent, with shipping and logistics companies slipping 1 percent. (Yonhap News)