South Korean stocks closed up 0.53 percent Monday to flirt with the 2,100-point plateau for the first time in nearly four years, as ample liquidity in the financial system and an upbeat corporate earnings outlook boosted investor sentiments here, analysts said. The local currency declined sharply against the U.S. dollar.

The benchmark Korea Composite Stock Price Index increased 11.16 points to end at 2,098.92, just shy of the landmark 2,100-point level, which has been out of reach since Aug. 2, 2011.

Trading volume was heavy at 547.6 million shares worth 6.94 trillion won ($6.32 billion), with gainers outnumbering decliners 449 to 362.

The Monday turnover marked the highest in two years and seven months since Septermber 2012, according to the bourse operator "The Bank of Korea slashed the policy rate to a record low of 1.75 percent last month. Along with a series of expansionary fiscal policies, investors acknowledged the Seoul government's strong will to boost the economy," said Bae Sung-young, a senior market analyst at Hyundai Securities Co.

"For the past three or four years, the KOSPI has struggled to make a notable gain while stock markets in advanced countries have been on the rise. Now we can overcome the 2,100-point line soon, and then go over to the 2,200-point level in the near future."

He said the upcoming first-quarter earnings season will also support the KOSPI's rally this month, as big-cap exporters led by tech giant Samsung Electronics are expected to have racked up better-than-expected bottom lines.

Foreigners purchased a net 280.6 billion won worth of local shares to lead the increase, extending their buying streak to five consecutive sessions. Institutional investors dumped a net 279.8 billion won.

Chemical firms were the biggest winners, with industry leader LG Chem jumping 6.05 percent to 271,500 won and Lotte Chemical adding 2.98 percent to 242,000 won.

Top builder Hyundai Engineering & Construction jumped 5.6 percent to 58,500 won and Daewoo Engineering & Construction vaulted 10.26 percent to 8,920 won.

Amore Pacific, South Korea's largest cosmetics firm, gained 4.14 percent to 3,700,000 won and No. 2 LG Household & Healthcare rose 0.36 percent to 839,000 won.

Hotel Shilla soared to a daily limit of 15 percent to close at 113,000 won on news that it will run a joint duty-free shop with Hyundai Development Co.

Tech firms closed mixed, with Samsung Electronics falling 0.74 percent to 1,479,000 won and chipmaker SK hynix gaining 1.38 percent to 44,200 won.

The local currency closed at 1,098.6 won against the U.S. dollar, down 5.9 won from Friday's close.

Bond prices, which move inversely to yields, ended lower. The yield on three-year Treasury bonds rose 1.8 basis points to 1.732 percent, while the return on the benchmark five-year government bonds increased 3.5 basis points to 1.831 percent. (Yonhap)