(Updates to midday)
* KOSPI on track for a second straight winning session
* Foreigners pick up local stocks to underpin
* Shinsegae, Hanwha Chem support broad market gains
SEOUL, Dec 18 (Reuters) - Seoul shares inched up on Wednesday morning, adding to their recovery from the recent skid led by retailers and chemicals, although caution on the outcome of the Federal Reserve’s monetary meeting later in the day limited gains.
The Korea Composite Stock Price Index (KOSPI) was up 0.2 percent at 1,969.75 points by 0205 GMT, gaining support near its 120-day moving average where the price to book-value ratio is an equal 1, attracting bargain hunters.
“Regardless of when the Fed decides to start its stimulus trimming, the market is ready to respond with a relief rally as this ongoing tapering talk has put on immense pressure for months,” said Shawn Oh, a market analyst at Daishin Securities.
“However, the rally will be short-lived in the absence of market-moving risk variables at the moment,” he added.
Wall Street ended slightly lower overnight with investors holding off big bets before the Fed issues a statement on Wednesday at the meeting’s conclusion.
Earlier the Fed was not expected to start winding down its stimulus until March, but the recent run of robust economic indicators shortened the odds of tapering coming sooner rather later.
Foreign investors purchased a net 13.7 billion won ($13 million) worth of local shares near mid-session, buttressing the index.
Retailers were briskly bought on hopes of a year-end consumption boost, with retailers Shinsegae Co Ltd advancing 3.9 percent and E-Mart Co Ltd rising 2.8 percent.
Hanwha Chemical and LG Chem Ltd added 2.8 percent and 1.6 percent, respectively, underpinning the main index.
Meanwhile Korea Gas Corp extended its slide on grim full-year earnings outlook, slipping 1.9 percent.
Naver Corp, Korea’s largest search portal operator, fell 2.6 percent as some investors consolidated profits following a 3.4 percent rise in the previous session.
Decliners outnumbered advancers 429 to 308. The KOSPI 200 benchmark of core stocks climbed 0.3 percent higher, while the junior KOSDAQ edged down 0.2 percent.
With eight trading days remaining in 2013, the KOSPI has slipped 1.3 percent over the year following a 9.3 percent rise in the previous year. The last trading day for local stock markets is Dec.30. ($1 = 1051.0500 Korean won) (Reporting by Jungmin Jang; Editing by Eric Meijer)