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Seoul shares inch up but trim gains after initial Samsung boost

* LG Display dives after brokerage downgrade

* Builders underperform on worries about housing market

* Domestic institutionals' buying supports market

SEOUL, Oct 5 (Reuters) - Seoul shares edged up on Friday morning but pared earlier gains as weakness in LG Display Co Ltd

and builders weighed on the market following an initial boost from Samsung Electronics Co's robust earnings guidance.

The Korea Composite Stock Price Index (KOSPI) had gained 0.3 percent to 1,997.81 points as of 0146 GMT, after rising to 2007.84 earlier.

"The poor performance of LG Display and other laggards is weighing down on the bounce to the KOSPI following Samsung's announcement," said Kim Chul-jung, an analyst at Korea Investment & Securities.

Before the open, Samsung Electronics estimated third-quarter profit of 8.1 trillion won ($7.3 billion) -- a fourth straight record quarter and nearly double last year's figure -- powered by strong sales of its Galaxy smartphones.

Shares in Samsung Electronics, which make up over 15 percent of the benchmark KOSPI, opened up 1.5 percent before turning negative to trade down 0.5 percent.

"Samsung Elec's share price is expected to maintain its current level while trying for measured gains," said David Choi, an analyst at SK Securities. "Samsung Elec's share price had been steadily gaining before today's earnings results, and now share movement will be affected by fourth-quarter forecasts."

LG Display tumbled 4 percent after a local brokerage downgraded its outlook for the South Korean flat-screen maker, citing concerns about fourth-quarter sales.

Builders underperformed, with Kumho Industrial Co

sliding 4.7 percent on worries about a downturn in the housing market.

Domestic institutional investors purchased 38 billion Korean won worth of KOSPI shares near mid-session, offsetting selling by foreign and retail investors.

Winning shares outnumbered decliners by 446 to 311.

The KOSPI 200 benchmark of core stocks was up 0.3 percent, while the junior KOSDAQ edged 0.5 percent higher.

(Reporting by Somang Yang; Additional reporting by Seongwon Chang; Editing by Chris Gallagher)

((somang.yang@thomsonreuters.com)(+82 2 3704 5643)(Reuters Messaging: somang.yang.thomsonreuters.com@reuters.net))

Keywords: MARKETS KOREA STOCKS/