S.Korea stocks hit 3-mth high, won extends gains on U.S. optimism

* KOSPI opens above 2,000 points, 1st since Jan. 2

* Won hovers near 11-week high

By Jungmin Jang

SEOUL, April 2 (Reuters) - South Korean shares inched up to their highest level in three months on Wednesday morning, while the won scaled 11-week highs, supported by encouraging U.S. factory activity for March and ongoing hopes China will move to stimulate its sagging economy.

U.S. factory activity accelerated for a second straight month in March and auto sales surged, separate reports showed on Tuesday, giving credence to the theory that soft data earlier this year was due to the weather and not weakening fundamentals. ID:nL1N0MT0Q6

"The Chinese economy appears to be bottoming out from a worst case scenario while the U.S. economy continuously shows strength, paving a way for foreign capital to enter the local market," said Kim Hak-gyun, head of investment strategy at KDB Daewoo Securities.

The Korea Composite Stock Price Index (KOSPI) .KS11 was up 0.2 percent at 1,997.09 points as of 0224 GMT after hitting an intraday high of 2,001.26, breaching the psychologically important 2,000 point barrier for the first time since Jan. 2.

The market was also underpinned by expectations that Beijing would take stimulus steps to arrest a recent loss of economic momentum. On Tuesday, a private survey of factory activity in China, South Korea's largest export market, showed contraction for a third straight month. ID:nL4N0ML0CG

Kim expects equities to also benefit should the upcoming January-March quarter corporate earnings season holds no nasty surprises.

Foreign investors purchased a net 125 billion won ($118.1 million) worth of KOSPI shares near mid-session. Advancers outnumbered decliners 434 to 333.

Bullish March sales at home and abroad lifted automakers Kia Motors Corp 000270.KS and Ssangyong Motor Co Ltd 003620.KS , which advanced 6.4 percent and 2.4 percent, respectively.

However, Hyundai Motor Co 005380.KS , the KOSPI's second largest component, fell 0.8 percent after posting a 2 percent decline in U.S. sales. ID:nL1N0MT0IE

Oil refiner SK Innovation Co Ltd 096770.KS and chemical product manufacturer KCC Corp 002380.KS bucked the broad market rise, falling 1.6 percent and 2.5 percent, respectively.

In the foreign exchange markets, the won ticked up to an 11-week high level, heading for its sixth straight gaining session, underpinned by the brightening economic prospects in the U.S.

But further gains will depend on fresh catalysts, dealers said.

"It appears that the market will need an upbeat U.S. jobs report and new variables to move from the 1,050 range," a currency dealer said.

The local currency KRW=KFTC was quoted at 1,057.2 against the dollar by mid-day, up 0.1 percent compared with Tuesday's closing level of 1,056.6.

Earlier in the session, the won hit 1,056.2, a level not seen since Jan. 13.

The won has risen nearly 2 percent against the dollar during its five-day winning streak.

Fixed income assets were pressured on the other hand, with June futures on three year treasury bonds KTBc1 ticking down 0.04 points to 105.67.

0224 GMT Prev close

Dollar/won 1,057.2 1,058.5

Yen/won 10.1772/810 10.2074

*KTB futures 105.67 105.71

KOSPI 1,997.09 1,991.98

* Front-month futures on three-year treasury bonds ($1 = 1058.6500 Korean Won)