SEOUL: Seoul shares posted modest gains on Monday after a landmark EU summit where a deal was reached to implement tighter fiscal union and budget discipline, but gains are expected to be capped as doubts persist over the EU's thin safety net.
"Local shares were dragged up by a rise in Wall Street and closely paralleled gains in other Asian markets," said Hong Soon-pyo, an analyst at Daishin Securities.
"But foreigners are still dumping shares and the index failed to breach the psychologically significant 1,900 level, so sentiments are rather shaky."
The Korea Composite Stock Price Index (KOSPI) was up 0.99 percent at 1,893.29 by 0235 GMT.
Foreigners were poised to dump shares for a second consecutive session, offloading 65.0 billion won ($56.7 million) worth.
Tentative calm was restored to the market following last week's EU summit where a historic agreement was reached to draft a new treaty for deeper integration, but analysts remained sceptical on whether it would provide anything more than a temporary band-aid solution.
The effects of the debt crisis racking Europe has started cropping up elsewhere, with China posting its lowest export growth since February and further pressuring the government in Beijing to shift gears in its policy-easing stance.
Broad gains in large-cap technology shares helped to keep the market afloat, with Samsung Electronics up 2.85 percent and LG Electronics adding 2.82 percent.
Shares in Himart, South Korea's largest electronics retailer rose 3.51 percent, surrendering an early gain of 8 percent after South Korean retail giant Lotte Group denied reports that it was preparing to bid for the firm.
Daewoo Shipbuilding & Marine Engineering Co Ltd slipped 2.6 percent after the company announced late last Friday that one of its European clients had cancelled a $500 million contract order.
Defensive issues held their ground, with SK Telecom , South Korea's largest mobile carrier, up 1.0 percent and food giant Nongshim gaining 2.94 percent.
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