Seoul shares rise; steelmakers gain, Hynix falls

* Foreign investors buy for second session

* Hynix falls after Hanwha, GS deny bid interest

(Updates to close)

By Jungyoun Park

SEOUL, Feb 3 (Reuters) - Seoul shares gained on Wednesday as a continued rebound in steelmakers including POSCO (005490.KS) lent markets support, while Hynix (000660.KS) fell after Hanwha and GS Group denied rumours of their interest in the firm.

Analysts said U.S. stocks' two-day climb gave investors enough confidence to buy Seoul shares, with stronger than expected U.S. economic data, including pending homes sales data, boosting sentiment. [ID:nN02203495]

"Earlier fears about economies and further tightening moves from China have eased somewhat, but markets are likely to move within a tight range for some time. The index still has firm support at the mid-1,500 point level," said Lee Jin-woo, a market analyst at Mirae Asset Securities.

The Korea Composite Stock Price Index .KS11 (KOSPI) finished up 1.20 percent to 1,615.02 points.

Foreign investors were buyers of a net 137.8 billion won ($120.1 million) worth of stocks, picking up shares for a second consecutive session.

Steelmakers continued to rebound from recent sharp losses, with POSCO, the world's No.4 steelmaker, ending up 3.14 percent, rising for a second session, after shedding over 14 percent from late January to February 1.

Shares in Hyundai Steel (004020.KS), South Korea's No.2 steelmaker, also ended up 1.99 percent.

But shares in Hynix Semiconductor fell 3.18 percent after both Hanwha and GS Group denied rumours of their interest in the world's No.2 memory chip maker in their filings to the Korea Exchange on Wednesday.

Hanwha Corp (000880.KS), which leads Hanwha Group, advanced 4.41 percent, and GS Holdings (078930.KS), the holding firm of GS Caltex, rose 1.9 percent.

Defensive issues underperformed, with shares in SK Telecom (017670.KS), South Korea's top mobile phone carrier, retreating 0.28 percent and Hite Brewery 103150.KS, the country's largest brewer, losing 1.26 percent.

Halla Engineering & Construction (014790.KS), a construction unit of Halla Group, ended up 2.11 percent, ahead of Korea Exchange's approval of the IPO of the group's auto parts manufacturing affiliate Mando.

Brokerages rose in line with the market's rebound.

Samsung Securities (016360.KS), South Korea's top brokerage, rose 2.37 percent, and Woori Investment & Securities (005940.KS) gained 1.32 percent.