S.Korea shares up on foreign inflows but U.S. shutdown fears cap gains


* Trade volume light as U.S. on brink of shutdown

* Foreigners, institutions purchase local stocks

* Samsung SDI rise again on bullish earnings outlook

SEOUL, Oct 1 (Reuters) - South Korean shares rose on Tuesdaymorning, buoyed by extended foreign buying, but gains werecapped by fears that the U.S. government was on the brink of amajor shutdown.

The Korea Composite Stock Price Index (KOSPI) was up0.7 percent at 2,010.62 by 0200 GMT, after touching an intradaylow of 1,996.77.

"Trading is subdued as investors closely await news from Washington," said Shinhan Securities analyst Han Beom-ho, beforeadding, "The market could rapidly move to negative terrain ifU.S. government shutdown becomes a reality."

Some investors also took heart from China's official surveyof factory activity, although it did not improve as much asexpected. The official September manufacturing purchasingmanagers' index (PMI) was at 51.1, rising from August 51.0.

Earlier in the day, a similar private survey showed SouthKorea's manufacturing activity contracted for the fourthconsecutive month in September, while another report showedexports also contracted at the sharpest pace in seven month,recording a 1.5 percent year-on-year decline.

Foreigners were on track for a 25th consecutive session ofnet buying, purchasing 66.5 billion won ($61.88 million) worthof local shares in the morning.

Meanwhile, institutions repositioned themselves asnet-buyers by purchasing 20.3 billion won after 15 consecutivesessions of selling.

Automaker Hyundai Motor Co rose 1.6 percent,while its affiliates Kia Motors Corp and HyundaiMobis Co Ltd advanced 2 percent and 1.2 percent,respectively.

Samsung SDI Co Ltd rose 2.1 percent afterelectric automaker Tesla Motors Inc gained overnight,heightening prospects for better sales of secondary batteries.Its affiliate Samsung Electronics Co Ltd rose 1percent.

Defensive sector plays outperformed amid broader marketuncertainty, with SK Telecom Co Ltd and HanaFinancial Group Inc rising 2.3 percent and 1.9percent, respectively.

Crown Confectionery Co Ltd rose 2 percent afterKorean Exchange (KRX) said on Monday the company will be listedto the KOSPI 200 starting Nov.2.

Gaining shares outnumbered decliners 420 to 354.

The KOSPI 200 benchmark of core stocks rose 0.8percent, while the junior KOSDAQ also edged 0.1 percenthigher.

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