* Foreign buying poised for 26th consecutive net buying day
* SK Hynix, Samsung Elec up on DRAM price rise
* Hyundai Motor, Kia Motors drop on disappointing Sept sales
SEOUL, Oct 2 Seoul shares gave up initial gains to move within a narrow range on Wednesday morning, as robust U.S. manufacturing data and strong foreign inflows helped to offset investor caution ahead of Thursday's market closure.
The Korea Composite Stock Price Index (KOSPI) was effectively flat, up just 0.2 percent at 2,002.41 by 0300 GMT after hitting an intraday high of 2,012.82. Local markets will be closed on Thursday for a public holiday and resume on Friday.
Though seen as likely to be short-lived, the U.S. government shutdown is yet to make progress as U.S. President Barack Obama and congressional Republicans came no closer to end a standoff on Tuesday.
"With uncertainty in Washington ahead of our day off, investors are cautious about building aggressive momentum," said Tong Yang Securities analyst Lee Jae-mahn.
Meanwhile, according to an industry report on Tuesday, the U.S. manufacturing sector expanded at its fastest pace in almost 2-1/2 years over September, inspiring confidence that South Korea's second-largest export market is on a firmer footing.
Foreigners purchased a modest 52.7 billion won ($49 million) worth of local shares in the morning.
Gains in the U.S. semiconductor index, fueled by a 9 percent price rise in DRAM memory chips since late August, lifted memory chip maker SK Hynix Inc 3.2 percent, while Samsung Electronics Co Ltd also rose 2.2 percent.
Earlier in the day Samsung's IT & Mobile (IM) section chief told reporters that IM's third-quarter earnings will top second-quarter earnings.
Samsung Electronics is to release its tentative third quarter earnings on Friday, and will reveal the sales of its newest Galaxy Note3 high-end smartphone next week.
Shipbuilders halted a two-day skid, with Hyundai Heavy Industries Co Ltd and Samsung Heavy Industries Co Ltd advancing 1.2 percent and 1.4 percent, respectively. The sector fell 2.6 percent during the two day skid.
Hyundai Motor Co and Kia Motors Corp dropped 2.4 percent and 4.1 percent, respectively, on sluggish September sales reports released on Tuesday.
The South Korean duo, once stellar performers in the U.S. market, has been losing U.S. market share this year, as strikes in South Korea exacerbated U.S. supply constraints and demand cooled for its ageing models, analysts said.
"Kia fared worse than Hyundai in September because it shipped fewer Soul cars from South Korea to the U.S. market ahead of the U.S. launch of a revamped Soul later this year," Lee Myung-hoon, an analyst at HMC Investment & Securities.
Hyundai and Kia's part-maker affiliate, Hyundai Mobis Co Ltd also fell 3 percent.
Gaining shares outnumbered decliners 580 to 230.
The KOSPI 200 benchmark of core stocks edged up 0.2 percent, while the junior KOSDAQ also advanced 0.3 percent. ($1 = 1073.7500 Korean won) (Reporting by Jungmin Jang; Additional reporting by Hyunjoo Jin; Editing by Eric Meijer)