The Korea Composite Stock Price Index (KOSPI) was up 1.14 percent at 1,833.94 points as of 0221 GMT. Foreigners continued to offload stocks after selling the biggest amount of shares in seven weeks on Thursday. "The stock market is staging a technical rebound today, but volatility could increase next year because of the news from Europe," said Cho Young-hyun, an analyst at Hana Daetwoo Securities. Italy, the latest euro zone nation to find itself in the bond market's crosshairs, moved closer to a national unity government on Thursday, while its treasury managed to sell 1-year bills at yields of less than 7 percent -- the threshold that investors believe renders its debt burden unsustainable. But investors remained cautious amid a European debt crisis that appeared no closer to resolution, keeping a lid on equity gains and pushing other riskier assets such as commodities lower. The Bank of Korea held interest rates steady for the fifth successive month on Friday, as expected. Most large-cap stocks climbed, with Samsung Electronics gaining 2.1 percent and Hyundai Motor up 0.2 percent. Shares in Hynix Semiconductor and SK Telecom gained ground after the latter submitted a final bid for Hynix, the world's second-biggest computer memory chip maker. Hynix was up 1.6 percent, while SK Telecom rose 2.8 percent. "It is hard to say that the acquisition is 100 percent positive for SK Telecom. But the sales prices are not seen that different from market expectations, and SK shares have already reflected the Hynix buy," Hwang Sung-jin, an analyst at HMC Investment Securities, said. Shares in South Korean tyre maker Nexen Tire surged 10 percent on Friday after the company said it had considered a cooperation arrangement with its French peer Michelin.