South Korea’s benchmark stock index surged Friday, snapping an eight-day losing streak _ its longest in more than five years _ as investors bought financial and auto shares.

The rally came after another big decline overnight on Wall Street. The Korea Composite Stock Price Index jumped 55.04 points, or 5.8 percent, to close at 1,003.73.

Regional markets also bounced back after recent declines and despite a steep drop in U.S. markets Thursday, when the Dow Jones industrial average shed 444.99 points, or 5.56 percent, to 7,552.29.

The Kospi rose as Swiss bank UBS issued a bearish forecast for South Korea’s economy, predicting in a note to clients that it will contract 3 percent in 2009 amid worsening conditions such as increasing non-performing loans, rising corporate failures, falling house prices and slowing exports.

The last time gross domestic product shrank on an annual basis was in 1998, when it contracted 6.9 percent as a result of the Asian financial crisis.

Not all economists are as pessimistic. Citibank Korea expects Asia’s fourth-largest economy to grow 2.2 percent next year, still down sharply from last year’s 5 percent expansion.

Several major South Korean banks, which had fallen sharply Thursday, gained.

Woori Financial Group rose 6.9 percent to 5,400 won ($3.61), Shinhan Financial Group gained 8 percent to 28,500 won ($19), while KB Financial Group rose 1.8 percent to 25,000 won ($16.60).

Hyundai Motor Co. surged 14.8 percent to 45,900 won ($30.48). Affiliate Kia Motors Corp. rose 10.5 percent to 7,880 won ($5.27).

The Kospi has fallen 47 percent so far this year as a long bull market in South Korean stocks came to an end. The index had recorded double-digit gains in four of five years through 2007.

In currency trading, the South Korean won gained 0.1 percent to close at 1,495 against the U.S. dollar.

The won had tumbled Thursday to its lowest close since March 1998, when South Korea was one of the economies worst hit by the Asian financial crisis.

South Korea’s currency has declined 37 percent against the dollar this year, pushed lower largely by record selling of stocks by foreign investors.