Four of Daewoo's creditor banks stepped in Tuesday to fix a drastic restructuring package for the debt-ridden conglomerate by August 11. The composite index closed up 55.91 points or 6.4 per cent to close at 928.85, of a high of 931.01.

Volume was $3.9 billion. Risers outnumbered fallers 681 to 171, with 32 unchanged. Dongwon Securities analyst Lee Yong-Il said the gains came largely as a reaction to two days of sharp falls, adding that the reduction in foreign selling pressure also boosted sentiment.

``In particular, active foreign buying of banks positively affected the market,'' he said. He said expectations that South Korea would overcome the Daewoo crisis also underpinned the market's rebound. However, he said it was too early to tell if the market had hit its short-term bottom yet, with Daewoo Group issues still weighing onsentiment. ``I think the market will be rangebound between 870-950 points, rather than extending steep gains,'' he said.

The benchmark three-year corporate bond yield was 9.10 per cent from 9.26 and the yield on the government bond was at 8.23 per cent from 8.49 per cent. Banks were among the strongest gainers, with the banking index rising 10.29 per cent to 217.09.