Seoul shares fall on foreign selling, Fed caution

* KOSPI down 0.95 pct as foreign investors snap buying streak

* LG Display gains after Japan quake

* Samsung Techwin up on brokerage upgrade

(Updates to mid-morning)

By Jungyoun Park

SEOUL, Aug 12 (Reuters) - Seoul shares traded lower on Wednesday, with caution prevailing before an interest rate decision by the U.S. Fed, but panelmaker LG Display (034220.KS) rose on news a quake in Japan had threatened glass supplies.

The Korea Composite Stock Price Index (KOSPI) was down 0.95 percent at 1,564.28 points as of 0135 GMT.

"U.S. stocks fell for a second straight session, hurting sentiment. Deepening caution before the Fed's rate decision is also weighing," said Bryan Kwak, a market analyst at Eugene Investment & Securities.

Foreign investors were sellers of a net 44.8 billion won ($36.05 million) worth of stocks, snapping a 20-session buying streak.

Shares in LG Display (034220.KS) advanced 2.18 percent after news an earthquake had disrupted glass production in Japan and may deepen an ongoing shortage. [ID:nSEO37071]

"The news fueled expectations more orders will go to South Korean display makers including LG Display," said Lee Ka-keun, an analyst at IBK Securities, adding that liquid crystal display panel prices were also expected to rise.

Shares in Kia Motors (000270.KS) fell 1.51 percent despite the carmaker reporting forecast-beating quarterly net profits earlier on Wednesday, after a recent rally.

Kia, which is part of world No. 5 automaker Hyundai Motor Group along with affiliate Hyundai Motor Co (005380.KS), reported a net profit of 347.1 billion won ($279.3 million) in the second quarter, versus a 159 billion won forecast by 10 analysts in a Reuters poll. [ID:nSEL000738]

Shares in Samsung Techwin (012450.KS) rose 1.88 percent to 70,300 won after Nomura on Wednesday upgraded its rating on the maker of closed-circuit televisions (CCTV) and aircraft engines to "Buy" from "Neutral" and raised its target price to 88,000 won. Shares in Samsung Techwin closed at 69,000 won on August 11.

Financial issues including KB Financial Group (105560.KS) came under pressure after their U.S. peers' falls on bearish comments by a prominent analyst, which sent the S&P financial index .GSPF 3.53 percent lower.

KB Financial Group sank 3.76 percent and Hana Financial Group (086790.KS) shed 3.61 percent.