South Korean shares rose Thursday as local institutions snapped up stocks on views that local stocks were undervalued that offset lingering concerns over the possible exit of Greece from the EuroZone.

The benchmark Korea Composite Stock Price Index (KOSPI) inched up 5.85 pts, or 0.32%, to close at 1,814.47. Trading volume stood at 401.67-M/shrs worth 3.48-T Won (US$2.95-B).

After bobbing in and out of negative terrain, the KOSPI managed to end higher on views that the KOSPI was undervalued due to the recent sharp fall caused by the possible exit of Greece from the Euro region.

The possibility for Greece to drop out of the euro zone seemed more real after Lucas Papademos, former Greek prime minister, told media that preparation for Greece's exit from the euro zone are being considered and warned that dropping the single currency would have catastrophic economic consequences for the debt- ridden nation and the rest of the EuroZone.

Adding to fears, EuroZone officials have agreed that each euro zone country must prepare an individual contingency plan in the eventuality that Greece decides to leave the single currency area.

However, market concerns eased after the European Union (EU) leaders discussed how best to prevent Greece from defaulting at an informal meeting overnight.

Market sentiment was also shored up by expectations that European leaders will reach a deal to keep the debt-ridden Greece in the euro zone.

Major indexes on Wall Street also erased losses late in the trading overnight.

Local institutions succeeded in driving the KOSPI up by purchasing a net 175.1-B Won worth of shares. Retail investors were also net buyers, but the net buying volume stood merely at 9.1-B Won.

Foreign investors kept their selling spree for 17 straight sessions by dumping a net 263.4-B Won worth of local shares. Foreigners sold a total of 3.87-T Won worth of stocks over the past 17 sessions.

Market watchers said that the KOSPI will make a sensitive response to the developments of the European situation for the time being, forecasting that the Key index would move in the narrow box range of around 1,800 pts.

Large-cap shares ended mixed. Market bellwether Samsung Electronics edged up 0.3% to 1,225,000 won, and leading chemical firm LG Chem gained 1.4% to 279,000 won.

Top steel maker POSCO rose 0.6% to 353,500 won, and the country' s # 2 carmaker Kia Motors increased 0.5% to 75,900 won.

The world's largest shipyard Hyundai Heavy Industries advanced 0. 8% to 257,000 won, and leading banking group KB Financial Group was up 0.8% to 36,250 won.

In contrast, the nation's top auto parts maker Hyundai Mobis declined 1.8% to 269,000 won. Hyundai Motor, Samsung Life Insurance, SK Hynix and SK Innovation closed unchanged at 233,500 won, 95,500 won, 22,400 won and 138,500 won respectively.

The local currency finished at 1,180.5 won against the greenback, down 7.6 won from Wednesday's close.

Bond prices ended higher. The yield on the liquid three-year treasury notes fell 0.01 percentage point to 3.35%, and the return on the benchmark five-year government bonds lost 0.01 percentage point to 3.47%.

Paul A. Ebeling, Jnr.

Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.

Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.