South Korean stocks closed 1.12 percent higher on Thursday, spurred by the U.S. Fed's confirmation of its plan to maintain stimulus measures, analysts said. The local currency gained against the U.S. dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) surged

22.45 points to 2,026.49. Trading volume was moderate at 414.3 million shares worth 4.09 trillion won (US$3.77 billion) with gainers outpacing losers 565 to 235.

"The anticipated automatic spending cuts by the United States had only a limited impact on the local stock market as the Federal Reserve assured that it would maintain stimulus measures," said Lim Jong-pil, a researcher at Hyundai Securities Co.

"Seoul shares finished bullish as investors sought after undervalued stocks," Lim added. "Global events, including Italy's election, have already been priced in."

Foreigners purchased a net 184.6 billion won worth of local shares, and institutional investors scooped up a net 293.3 billion won. Retail investors offloaded a net 450.7 billion won.

Tech blue chips drove up the shares, with market behemoth Samsung Electronics increasing 1.11 percent to 1,544,000 won, and top chipmaker SK hynix adding 0.95 percent to 26,500 won.

Daewoong Pharmaceutical, a South Korean drug maker, jumped 3.93 percent to 55,500 won following reports that the firm clinched a sales deal with a Syrian firm.

Hanwha, a major defense manufacturer, increased 1.16 percent to 34,900 won after the firm swung a net profit for the fourth quarter in 2012. Its affiliate Hanwha Chemical gained 2.84 percent to 19,900 won.

Carmakers also gathered ground, with No. 1 player Hyundai Motor increasing 1.4 percent to 218,000 won and its smaller affiliate Kia Motors climbing 0.9 percent to 55,900 won. Hyundai Mobis rose 1.14 percent to 313,000 won.

In contrast, NHN, the operator of South Korea's most-visited Internet portal, moved down 0.38 percent to 263,000 won and top flat-panel maker LG Display lost 1.29 percent to 30,550 won.

The local currency closed at 1,083.00 won against the greenback, up 1.40 won from Wednesday's close, following the Federal Reserve's decision to continue quantitative easing measures, dealers said. The local financial markets will be closed on Friday for March 1 Independence Movement Day.

Bond prices, which move inversely to yields, closed mixed. The yield on three-year Treasuries closed flat at 2.63 percent and the return on the benchmark five-year government bonds increased 0.01 percentage point to 2.74 percent. (Yonhap News)