South Korean shares rebounded on Monday after plunging more than 3 percent in the previous session due to a modest technical rebound from the previous session's sharp fall caused by deepening concerns over Europe's debt crisis.

The benchmark Korea Composite Stock Price Index (KOSPI) advanced 16.67 points, or 0.94 percent, to close at 1,799.13. Trading volume stood at 408.57 million shares worth 4.21 trillion won (3.6 billion U.S. dollars).

The KOSPI started higher and stayed in positive terrain throughout the session due to a technical rebound from the previous session's sharp drop. The key index rebounded on views that it was undervalued after plunging around 200 points this month.

Concerns over the European debt crisis eased after the Group of Eight (G8) leaders wanted Greece to stay in the euro zone by saying that "interest in Greece remained in the euro zone while respecting its commitments" to cut fiscal deficit. The leaders met at the G8 summit held in the presidential retreat Camp David, Maryland over the weekend.

Foreign investors shifted to net sellers after buying local shares in the morning session, but selling volume was not that big, indicating that foreigners' worries about the European woes eased somewhat following the G8 leaders' meeting.

Foreigners sold a net 57.5 billion won worth of local stocks, keeping their selling spree for 14 straight sessions. Local institutions and retail investors succeeded in driving the KOSPI to end higher by purchasing shares worth 14.5 billion won and 85 billion won respectively.

"Expectations spread that the KOSPI may near the short-term bottom after the European single currency did not fall further last week. The support line was formed at 1,780 points, which is book value of the KOSPI," Park So-yeon, an analyst at Korea Investment & Securities in Seoul, told Xinhua.

Park noted that there was no clear signal right now to weigh whether the KOSPI would rise or fall, saying that it remained to be seen if the parliamentary re-election in Greece would bring positive sentiment to the market.

The European Union (EU) leaders were expected to make all-out efforts to prevent the crisis from spreading to major nations such as Spain and Italy as the contagion will mean a collapse of the region's currency system, market watchers said, adding that if Greece exits the euro zone, it will not have a neutral impact on the market.

Large-cap stocks ended mixed. The world's largest shipyard Hyundai Heavy Industries rose 0.79 percent to 255,000 won, and leading chemical firm LG Chem gained 0.72 percent to 280,500 won. Top crude oil refiner SK Innovation advanced 1.44 percent to 140, 500 won.

In contrast, the nation's No.3 oil refiner S-Oil retreated 1.07 percent to 92,600 won, and top wireless carrier SK Telecom dropped 1.95 percent to 126,000 won. Consumer electronics giant LG Electronics slid 2.33 percent to 62,900 won.

The local currency finished at 1,168.9 won against the greenback, up 3.9 won from Friday's close.

Bond prices ended lower. The yield on the liquid three-year treasury notes rose 0.01 percentage point to 3.37 percent, and the return on the benchmark five-year government bonds added 0.02 percentage point to 3.49 percent.