"North Korea's regime change is seen as a lingering long-term issue, but it won't be factored into the market in the short run, when it's hard to predict how the situation will play out and harder still to quantify it," said Lee Jae-hun, an analyst at Mirae Asset Securities. "The base issue still lies firmly in Europe, funding risks and the outcome of liquidity measures and policy talks." The Korea Composite Stock Price Index (KOSPI) rose 2.85 percent at 1,844.23 points as of 0230 GMT. Wall Street shares jumped nearly 3 percent after the US Federal Reserve proposed new liquidity rules that turned out to be less stressful than some investors had feared. Rosy sentiments were further boosted as US housing starts and construction permits posted a 1-1/2 year high, a possible sign that the US housing market was entering a stage of recovery. German business confidence rose sharply in December contrary to negative expectations, highlighting the strength of Europe's largest economy even in the face of a region-wide sovereign debt crisis. Gains were led by bank shares, with Shinhan Financial Group soaring 7.35 percent and Hana Financial gaining 4.09 percent. Shipbuilders rallied, with Daewoo Shipbuilding & Marine Engineering Co Ltd surging 4.23 percent after it said it was set to win a $1.1 billion submarine order from the Indonesian navy. Large-cap technology shares climbed across the board, with Samsung Electronics up 2.96 percent and LG Electronics gaining 3.99 percent. Shares in Hyundai Merchant Marine Co rallied 4.32 percent after Neptune Orient Lines, a Singapore-based global logistics company, announced a partnership between the two companies and five other shipping lines to create a new alliance in the Far East-Europe trade network. Foreign investors snapped up 41.8 billion won ($36 million) worth of shares, poised to snap two sessions of selling, while institutions were net buyers of 91.4 billion won worth.