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* Foreigners continue selling, but amount modest
* Financial and construction sectors lead index rise
* KRX suspends trading for Tongyang and its subsidiaries
SEOUL, Jan 29 (Reuters) - Seoul shares rose on Wednesday morning as a bold interest rate hike by Turkey soothed risk sentiment ahead of a long weekend, while investors awaited the outcome of a key policy meeting by the U.S. Federal Reserve.
Local stock markets will be closed on Thursday and Friday for the Lunar New Year holiday, and will reopen on Monday.
The Korea Composite Stock Price Index (KOSPI) was up 0.6 percent at 1,929.30 points as of 0205 GMT, extending a recovery from Monday's 1.6 percent fall.
"The market is reaching back to the levels of the pre-emerging markets jitters before the holidays and Fed meeting as related concerns have somewhat alleviated overnight," said Kim Byung-yeon, an analyst at Woori Investment & Securities.
Later in the global day, the Fed's two-day policy meeting comes to an end, at which it is widely expected to trim its asset-buying programme by another $10 billion a month.
On Tuesday, Turkey followed India by raising interest rates at a midnight meeting of its central bank, stirring hopes that the move would short-circuit a vicious cycle of selling in emerging markets and revive risk appetite in the developed world..
Although foreigners continued to position as net sellers by offloading a net 17.7 billion won ($16.3 million) worth of KOSPI shares by mid-morning, the amount was modest compared with the previous four sessions where they sold a combined 1.1 trillion won.
Advancers outnumbered decliners 539 to 216 in mid-morning trading, with financials and builders leading broad market gains. Hana Financial Group Inc rose 2 percent while Woori Finance Holdings Co Ltd gained 3 percent.
Samsung Engineering Co Ltd jumped 6.6 percent after announcing bullish October-December quarter earnings on Tuesday. It recorded an operational profit for the first time in three quarters.
Samsung Life Insurance Co Ltd advanced 3.5 percent following a regulatory filing on Tuesday, that reported the repurchase of its own shares worth nearly 200 billion won.
Meanwhile, the Korea Exchange (KRX) said on Tuesday that Tongyang Inc and its subsidiaries Tongyang Network Corp, Tongyang Cement & Energy Corp had been placed under a trading suspension from Wednesday to Feb. 20.
The KRX said in a statement it plans to tighten screening for listing eligibility after some of the group's executives were indicted by the Seoul Prosecutor's Office on alleged charges of embezzlement and breach of trust.
Executives at Tongyang Inc could not be immediately reached for comment. A Tongyang Cement executive from the public relations department said it had not yet received notice from its parent about the matter.
The KOSPI 200 benchmark of core stocks was up 0.7 percent, while the junior KOSDAQ gained 0.9 percent.
$1 = 1083.7000 Korean won Reporting by Jungmin Jang; Editing by x