South Korean stocks are expected to be influenced by European political developments and U.S. economic data next week, local analysts said Saturday.

The country's key stock index, the KOSPI, closed at 1,917.13 on Friday, a drop of 3.62 percent or 72.02 points from a week earlier, mainly due to anti-austerity election results in France and Greece and disappointing U.S. labor market reports.

The KOSPI tends to track Wall Street and reacts to overseas developments affecting trade and investments. The market lost ground for three straight sessions in a row from Wednesday onwards.

The lack of upward momentum in the local bourse, caused by sluggish economic gains, contributed to the overall poor showing.

Analysts said the market's reaction to the German-French summit will influence the direction of stocks in the coming days. In addition, moves by Greece to cope with its debt situation, which could result in the withdrawal of crucial bailout assistance from the EU and International Monetary Fund, will impact global stock prices.

They said U.S. consumer price index numbers due out next week and the release of minutes for the latest Federal Open Market Committee meeting needed to be watched. There has been speculation that Washington may consider another quantitative easing measure to fuel economic growth.

"Initial eurozone risks have been reflected in the market, so there may not be sharp drops," said Lee Seung-woo, an analyst at Daewoo Securities. He said for the time being, there is no need to consider radical steps taking place in Europe.

Lee added that investors will probably try to lock in gains through short term buying and selling of stocks in the coming days. (Yonhap News)