[SEOUL] South Korean shares ticked higher on the first trading day of the new year on Friday, but gains were capped by further signs of weakness in China's economy.
The Korea Composite Stock Price Index (KOSPI) was up 0.2 per cent at 1,918.68 points as of 0252 GMT, after briefly touching a fresh 2-week intraday low.
China's official Purchasing Managers' Index (PMI) slipped to its lowest level of the year in December, with factory activity growth coming close to stalling, underlining challenges faced by the world's second-largest economy and South Korea's biggest trading partner.
South Korean shares fell 4.8 per cent in 2014, their first annual decline since 2011.
Still, analysts see a steady but slow recovery in January.
"As we enter the earnings season, we are going to see a clear differentiation between improving sectors such as technology stocks, and deep cyclicals such as energy and petrochemicals which may fall significantly short of forecasts amid the oil plunge," said Samsung Securities in a note.
Construction and energy counters underperformed, with Daewoo Engineering & Construction tumbling 3.4 per cent while SK Innovation, South Korea's largest refiner, slid 1.4 per cent.
Firms with cross-border business ties with North Korea rallied after North Korean leader Kim Jong Un said that he was open to a summit meeting with South Korea.
Hyundai Merchant Marine, a major stakeholder of unlisted tour operator Hyundai Asan, which runs a mountain resort in North Korea, jumped more than 8 percent.
The South Korean won fell, pressured by the dollar's broad gains as well as the yen's renewed fall towards a 7-year low.
The local currency was quoted at 1,102.0 to the dollar as of 0240 GMT, compared to 1,099.3 seen at the end of Tuesday's session.
It lost 4 percent in 2014.
March futures on three-year treasury bonds shed 9 basis points to trade at 108.11.
South Korean financial markets were closed on Wednesday and Thursday for the holidays.