"In addition to the manufacturing data, Italy's budget surplus figures were signs that fiscal reforms were on the right track and gave a much needed confidence boost ahead of upcoming summit meetings," said Rhoo Yong-suk, a senior analyst at Hyundai Securities.

French President Nicolas Sarkozy will meet German Chancellor Angela Merkel on January 9 for new talks on budget discipline ahead of a meeting of finance heads followed by an EU leaders' summit at the end of the month.

"The focus is also on the slew of results by Korean companies and US data due this month, and judging by the pre-earnings reports and other forecasts, the outlook appears very solid," Rhoo added.

The Korea Composite Stock Price Index (KOSPI) was up 2.05 percent at 1,863.42 points as of 0200 GMT.

Gains were led by refiners and petrochemical shares, buoyed by a surge in crude oil prices amidst rising tensions between Iran and the West that could threaten to disrupt supply lines.

SK Innovation, the parent of South Korea's largest crude oil refiner, spiked up 6.41 percent while the country's third largest refiner S-Oil Corp jumped 5.47 percent.

LG Chem, South Korea's largest chemical firm, climbed 3.44 percent.

Shipbuilders lent support, with Hyundai Heavy Industries up 4.45 percent while Daewoo Shipbuilding & Marine Engineering rose 4.9 percent.

Tech giant Samsung Electronics Co, the largest issue on the KOSPI, was 1.48 percent higher at 1,097,000 after touching a fresh all-time record high of 1,100,000 early in the session.

"Positive expectations about Samsung's fourth-quarter earnings are fuelling appetite for its shares," said Lee Ka-keun, an analyst at Hana Daetoo Securities.

Shares in GS Engineering & Construction rose 4.29 percent after the company announced a roadmap to aggressively expand its overseas operations by 2020.

Institutions were net buyers of 177.5 billion won ($153.7 million) worth of shares while offshore investors snapped up a net 102.5 billion won worth.