Shares ended 3.7 percent higher for the week, marking the sixth consecutive weekly gain. The KOSPI has gained almost 10 percent since the start of the year.
Blue chips set the pace, with top local carmaker Hyundai Motor Co rising 1.97 percent to 56,800 won and Samsung Electronics Co Ltd, the world's top maker of memory chips, climbing 1.93 percent to end at 527,000 won.
The central bank left interest rates unchanged at a record low 3.25 percent on Tuesday, citing tentative evidence of a pickup in consumer demand. Shipping firms posted fresh gains, extending a rally since the government implemented on February 7 a new tax system for the sector that could result in substantial savings. Hanjin Shipping Co rose 5.17 percent to end at 27,450 won.
Steel makers also rose amid expectations they will increase steel prices by the end of the first quarter. INI Steel, which announced on Thursday it would buy, back 6.5 million of its own shares, rose 5.33 percent to 15,800 won.
South Korea's leading air carrier Korean Air Co rose 4.47 percent to 19,850 won after a dip in oil prices eased worries about the impact of higher fuel costs on earnings. S-Oil Corp, South Korea's third-biggest oil refiner, rose 1.69 percent to 66,000 won. It announced shortly after the market closed its fourth-quarter profit soared on improving margins. On the downside, state-run power provider Korea Electric Power Corp fell 1.08 percent to 27,600 won, despite announcing a surge in quarterly profits, as investors worried about its earnings growth prospects in 2005.
South Korea's No 2 carmaker Kia Motors Corp, which said after the market closed its fourth-quarter profit, sunk from a year ago, fell 0.79 percent to end at 12,500 won. Kumho Tire Co Ltd.
Fell 5 percent to close at 16,150 won, after the tyre maker had surged in its London and Seoul debts this week.
Trade volume reached 540 million shares worth 3.5 trillion won compared to 511 million shares worth 3.3 trillion won on Thursday.
Gainers edged out losers by 494 to 253 with 66 titles ending flat. Foreign investors bought a net of 49.8 billion won ($48.58 million) in shares on the main bourse, while retail investors sold a net of 105.7 billion won.
Institutional investors sold a net of 5.9 billion won. The March KOSPI 200 futures index rose 1.75 points to 127.35 and the underlying KOSPI 200 spot index gained 1.50 points to 127.43. The over-the-counter Kosdaq fell 0.85 percent to finish at 510.66.