That puts it in the same group as Japan, Hong Kong, Britain, France, Australia, the US and about 20 other economies.

The rankings, part of the FTSE Global Equity Index Series, are closely watched by investors, fund managers and brokers and used for analysing investments and deciding asset allocation. Other popular global indexes include MSCI Inc and the Russell Global Index.

South Koreans, keen to raise their country's profile and be included in any ranking that is considered reflective of a country's international status, have long taken an interest in the FTSE rankings as a way to validate the country's development.

Many had expected a promotion last year and were disappointed when Israel was moved up but South Korea was not.

Thursday's promotion, to be implement in Sept 2009, was welcomed by President Lee Myung-bak, who has advocated easing regulations to entice more foreign investment. He said it would bring foreign capital to the country's markets, according to presidential spokesman Mr Lee Dong-kwan.

The index judges countries and markets based on a wide variety of criteria, including relative economic wealth, quality of markets, consistency and predictability, market access, treatment of minority shareholders and freedom and development of foreign exchange markets, among others.

FTSE Group, an independent company jointly owned by The Financial Times and the London Stock Exchange, creates and manages over 120,000 equity, bond and alternative asset class indices with partners and customers in 77 countries. -- AP