Seoul shares firm amid volatile trade;OCI tumbles

* KOSPI firm after heavy losses, but trims early gains

* OCI tumbles after reprot of investigation of chairman

* Banks up tracking U.S. peers, helped by brokerage notes
(Updates to mid-morning)

By Jungyoun Park

SEOUL, July 14 (Reuters) - Seoul shares rose on Tuesday after
posting the worst daily percentage loss in more than four months
in the previous session, but the market trimmed early gains by as
much as 1.7 percent as shipbuilders and OCI (010060.KS)
retreated.

The Korea Composite Stock Price Index (KOSPI) was up
0.49 percent at 1,384.94 points as of 0223 GMT, but down from an
earlier high of 1,402.00 points.

"Shares are trading higher after firm gains overnight on Wall
Street, but upward momentum is still weak and volatility
continues to pervade the market," said Hyundai Securities makret
analyst Bae Sung-young.

Gains were led by banking issues tracking a rally by their
U.S. peers, and further helped by positive brokerage notes.

KB Financial Group (105560.KS) rose 1.9 percent to 45,500 won
after JPMorgan upgraded KB Financial Group to "overweight" from
"neutral", raising its target price to 54,000 won and lifting its
net profit estimate for the parent company of top South Korean
bank Kookmin.

Shinhan Financial Group (055550.KS) rose 3.04 percent to
33,900 won after JPMorgan upgraded it to "overweight" and raised
its target price to 44,000 won.

But South Korean polysilicon maker OCI Co Ltd (010060.KS)
tumbled 8.87 percent after a report by Maeil Business Newspaper
that the company's chairman was being investigated by financial
regulators and prosecutors on suspicion of insider trading.
[ID:nSEO327912]

An OCI spokeswoman told Reuters the report "is not entirely
true," while a spokesman for the regulatory Financial Supervisory
Service said it did not have an official comment on the matter.

Shipbuilders also sank amid growing sectoral worries, sending
STX Offshore & Shipbuilding (067250.KS) down 3.45 percent.

Seoul Semiconductor (046890.KQ) was up 0.51 percent,
outperforming the junior Kosdaq's .KQ11 0.54 percent loss, as
news spread that it would set up a joint venture with Taiwan's
No. 2 light emitting diode (LED) company Huga Optotech
(8199.TWO).

Huga said in a statement that the two companies would set up
a venture 51-percent owned by Seoul Semiconductor.

LG Display (034220.KS) was down 0.6 percent after Dutch
electronics maker Philips (PHG.AS) and the world's No.2 liquid
crystal display maker on Monday said they had received a charge
sheet from the EU's executive arm about suspected price-fixing on
LCD panels. [ID:nLD622564]

POSCO (005490.KS), the world's No.6 steelmaker, rose 3.26
percent, despite weak quarterly earnings released yesterday.
Analysts said shares were helped by company comments that it
expected second-half earnings to nearly quadruple as rising steel
prices and improving demand from carmakers and other
manufacturers helped the industry recover from the toughest
operating environment in decades. [ID:nSEO174429]
(Editing by Chris Lewis)