South Korean stocks rallied 1.18 percent Thursday as the central bank's decision to cut its key interest rate boosted investor sentiment here, analysts said. The local currency fell against the U.S. dollar.
   
The benchmark Korea Composite Stock Price Index (KOSPI) added 23 points to finish at 1,975.45. Trading volume was moderate at 324.8 million shares worth 4.9 trillion won (US$4.56 billion) with gainers outnumbering decliners 521 to 291.
   
Analysts said the rise came as South Korea's central bank slashed the key interest rate for the first time in seven months earlier in the day in a bid to lend support to the government's drive to stimulate the local economy.  
   
In a split decision, Bank of Korea (BOK) Gov. Kim Choong-soo and his six fellow policymakers lowered the benchmark seven-day repo rate by a quarter percentage point to a two-year low of 2.5 percent for May.
   
"Seoul shares have been remaining flat compared to global peers in recent trading sessions due to a lack of stimulus measures by its central bank," said Bae Sung-young, an analyst at Hyundai Securities Co. "Today's move will add some vitality to the local stock market."  
   
Combined with the government's move to create an extra budget, the rate cut will work to give growth momentum to the main bourse, Bae added.
   
The country's parliament on Tuesday approved the government's proposed bill on an extra budget worth 17.3 trillion won, setting the stage for the government to drive the economic stimulus.
   
Foreign investors scooped up more shares than they sold at a net 134.3 billion won, and institutions also purchased a net 189.7 billion won. In contrast, individuals offloaded more shares than they bought at 333.4 billion won.
   
Builders gathered ground, with Hyundai Engineering & Construction rising 3.16 percent to 62,000 won and Daewoo Engineering & Construction advancing 2.7 percent to 8,000 won.
   
Brokerage houses also closed bullish on the rate cut, with KDB Daewoo Securities adding 1.32 percent to 11,550 won. Woori Investment & Securities gained 3.75 percent to 12,450 won.
   
Tech blue chips also closed higher, with market behemoth Samsung Electronics rising 1.81 percent to 1,515,000 won and its smaller rival LG Electronics adding 1.81 percent to 84,200 won. Top chipmaker SK hynix climbed 1.75 percent to 29,050 won.   

Namyang Dairy Products, a milk powder maker, rose 0.8 percent to 1,011,000 won sapping a five-session losing streak. The company  apologized for its unlawful acts of taking advantage of its distributors.
  
In contrast, NHN, the operator of South Korea's most visited Web portal, fell 3.99 percent to 288,500 won.
   
Mobile carriers also closed bearish, with No. 2 player KT moving down 1.41 percent to 38,400 won and LG Uplus, the smallest player, falling 1.67 percent to 11,800 won. Leading SK Telecom closed flat at 215,000 won.
   
The local currency ended at 1,091.00 won against the greenback, down 4.50 won from Wednesday's close amid the rate cut, dealers said. (Yonhap News)