Seoul shares flat; muted reaction to rate decision

* KOSPI in tight range, foreign investors continue to buy

* Limited reaction to widely expected rate hold decision

* Deutsche Bank sees index at 1,830 points at yearend

(Updates to mid-morning)

By Jungyoun Park

SEOUL, Aug 11 (Reuters) - Seoul shares were rangebound on Tuesday after losses overnight on Wall Street, with reaction to a widely expected central bank decision to keep rates on hold muted, but continued foreign buying lent support to markets.

The Korea Composite Stock Price Index .KS11 (KOSPI) was down 0.03 percent at 1,575.69 points as of 0158 GMT.

"Trading is rangebound following U.S. stocks' losses, and as shares have come up a lot in recent weeks. The urge to lock in profits is visible across markets," said Kim Yong-kyun, a market analyst at Daishin Securities.

"There is also caution before the U.S. Fed's rate decision on worries it may talk about the dreaded exit strategy, though most experts agree it won't be seriously discussed yet," Kim said.

Foreign investors were net buyers of 56.4 billion won ($45.92 million) worth of shares, headed for their 20th consecutive buying session, the longest such streak since March 1998.

Deutsche Bank upgraded its rating on the Korea Composite Stock Price Index .KS11 to "Overweight" from "Neutral" and hiked its yearend 2009 target to 1,830 points.

"In the second half of 2009, the Korean market will be driven by...global market share gain by leading Korean export names (and) growing footing in China riding on China's consumption growth momentum," Deutsche Bank said in a report dated August 10.

Banking issues rose, with Hana Financial Group (086790.KS) rising 1.37 percent and Woori Finance Holdings (053000.KS) gaining 2.06 percent.

But shares in SK Energy (096770.KS) fell 3.33 percent after South Korea's top refiner extended late on Monday the period for a 1.52 trillion won ($1.24 billion) investment in its hydrocracking centre to June 2016 from June 2011. [ID:nSEO255563]

"Investors are assuming that if the company is delaying building a lighter oil production facility, its profit margins may suffer," said Park Dae-yong, a market analyst at Hyundai Securities.

"However, SK Energy is just putting more thought into the timing of this investment as refining margins have not been good lately...I don't necessarily think that's negative," Park added.

Other refining issues also retreated, with GS Holdings (078930.KS), the holding company for South Korea's No. 2 refiner GS Caltex, losing 0.71 percent and S-Oil (010950.KS) retreating 0.51 percent.

Shares in Ssangyong Motor (003620.KS) spiked 15 percent for a fourth consecutive session, after the end of a prolonged and violent strike late last week and reports Tuesday employees were returning to work.

Ssangyong also said in a filing to the Korea Exchange on Tuesday that its suppliers had withdrawn a request to a bankruptcy court to seek the liquidation of the company to recoup debt.

Shares in Ssangyong Motor have risen nearly 74 percent since August 5.

(Reporting by Jungyoun Park; Editing by Jonathan Hopfner)