Seoul shares at 3-month closing high as techs rise

*KOSPI up 2.8 pct to 3-month closing high

*Main index up 9.3 pct since beginning of 2009

*Foreigners net buyers for a sixth consecutive session

*Samsung Elec rallies on expectation of price hike

SEOUL, Jan 7 - Seoul shares hit a three-month closing high on Wednesday led by technology issues such as Samsung Elec <005930.KS>, up on hopes of firmer memory chip pricing, while POSCO <005490.KS> rose on a potential output cut.

The Korea Composite Stock Price Index <.KS11> finished up 2.84 percent at 1,228.17 points, the highest close since October 15 last year, and advancing for a fifth consecutive session, the longest gaining streak since March, 2008.

Foreign investors were net buyers for a sixth straight session picking up a net 562.7 billion won, the biggest foreign buying since October, 2007 and extending their longest buying streak since April, 2007.

"Continued foreign buying on the back of falling credit spreads and improved market liquidity have lifted stocks, and gains will likely continue until the U.S. President Elec Obama's inauguration," said Bae Sung-young, a market analyst at Hyundai Securities.

"However gains and foreign buying will not likely continue for a meaningful period as the real economy remains weak. Tangible improvements in macroeconomic areas are necessary to unfreeze existing caution," said Kwak Joong-bo, a market analyst at Hana Daetoo Securities.

With expectations that foreign exchange rates would stabilise after the first quarter, investors are investing more liberally, according to Han Jeong-tae, Hana Daetoo Securities analyst.

"In dollar terms, South Korean stocks may look cheap."

Technology issues advanced after their U.S. peers gained as investors bet tech firms would benefit from President-elect Barack Obama's proposed economic plan, which would include the largest U.S. infrastructure investment since the 1950s.

Samsung Electronics <005930.KS> climbed 5.22 percent on expectations for stronger chip prices as Taiwan's top makers said they may hike prices, boosting hopes the market's worst-ever downturn may have bottomed.

Spot prices of dynamic random access memory (DRAM) chips, used mainly in personal computers, have been rebounding from an unprecedented slump as cash-strapped manufacturers cut back output amid sinking demand.[ID:nSEO190203]

A firm 5 percent rise seen in the U.S. semiconductor index <.SOXX> also lifted Samsung's smaller rival Hynix Semiconductor <000660.KS> by 1.22 percent.

Banking issues also rallied.

"After their prolonged losses and slump, foreign investors who had sold out on banks last year are picking up bargains among debris again," said Ku Yong-uk, an analyst at Daewoo Securities.

"We are seeing those banks which had been dealt heavier blows making heftier rebounds," Ku added.

Hana Financial Group <086790.KS> which had fallen 61 percent on 2008, was up 8.19 percent. Woori Finance Holdings <053000.KS>, which had lost 66 percent in 2008, rose 15 percent.

Meanwhile POSCO <005490.KS> advanced 5.91 percent after the world's No.4 steelmaker said on Tuesday it might cut steel production further in the current quarter to cope with slumping demand from automakers and home appliance firms.[ID:nSEO24271]

Doosan Corp <000150.KS> surged 12.14 percent after it said on Tuesday retail giant Lotte Group would acquire its spirits-making division for 503 billion won .[ID:nSEO16163]

"We expect Doosan to reserve the incoming cash proceeds mainly for debt repayment and future investment opportunities," Citi group said in a report dated Jan. 6.