(Updates to mid-morning)
* KOSPI ticks higher alongside regional markets
* Automakers rally after a long struggle on weaker yen
* Institutional investors net buyers, support main index
SEOUL, Dec 20 Seoul shares rose on Friday morning, with battered automakers such as Hyundai Motor lifted by bargain hunting while investors assessed the Federal Reserve's decision to unwind stimulus.
The Korea Composite Stock Price Index (KOSPI) was up 0.2 percent at 1,979.88 points by 0200 GMT.
The KOSPI is on track for a weekly gain of 0.8 percent, its first in three weeks.
"Despite shedding uncertainty, the Fed's decision led to the greenback's firming against currencies, indirectly affecting the won/yen currency rate to hurt risk sentiment," said Han Beom-ho, an analyst at Shinhan Investment & Securities.
Much of the uncertainty regarding the Fed's tapering was alleviated after it announced it would trim its monthly bond purchases by $10 billion to $75 billion, beginning in January.
Concerns over a sharply depreciating yen, however, have replaced worries about tapering, with the yen hitting a more than 5-year low against the won and risking local exporters' price competitiveness against their Japanese rivals in overseas markets.
The South Korean Supreme Court's ruling on Wednesday that fixed bonuses should be included in the calculation of regular wages also hurt sentiment, threatening to raise labour costs for companies that could affect profits.
The recently battered auto industry managed to post a sharp rebound on bargain hunting by the mid-session.
Hyundai Motor Co rose 2 percent after falling more than 11.3 percent so far this month. Affiliate Kia Motors Corp gained 1.7 percent while Ssangyong Motor Co Ltd added 2.1 percent.
Hanwha Chemical Corp advanced 3.2 percent on an improved earnings outlook after signing a letter of intent (LOI) to build a petrochemical plant in Iraq on Thursday.
Meanwhile, bucking the trend were search portal operator Naver Corp and online game developer NCsoft Corp , which slipped 1 percent and 2.5 percent, respectively.
Institutional investors were net purchasers of 81 billion won ($76.41 million) worth of KOSPI shares near the mid-session, while foreigners added a net 25.5 billion won to support the main bourse.
Advancers outnumbered decliners 394 to 338.
The KOSPI 200 benchmark of core stocks was up 0.3 percent, while the junior KOSDAQ gained 0.6 percent.
($1 = 1060.1000 Korean won) (Reporting by Jungmin Jang; Editing by Jacqueline Wong)