Seoul shares rangebound, steelmakers gain

* KOSPI moves narrowly, remains points away from 1,800

* POSCO, Hyundai Steel up after Chinese steelmakers' shutdown (Updates to mid-morning)

By Jungyoun Park

SEOUL, Sept 7 (Reuters) - Seoul shares traded flat on Tuesday after a four-session gaining streak and a holiday for U.S. markets on Monday, but steelmakers such as POSCO (005490.KS) rose on news of China's steel mill shutdowns.

The Korea Composite Stock Price Index .KS11 (KOSPI) was flat at 1,793.78 points as of 0220 GMT.

"Easing worries about the economy and an improving macroeconomic backdrop is helping market sentiment," said Choi Seong-lak, a market analyst at SK Securities. "However equity fund redemption volume is high above and around 1,800 points, and the market is facing challenges rising to that psychologically significant level."

Foreign investors were buyers of a net 86.7 billion won ($74.02 million) worth of stocks.

Steelmakers rallied after reports that 18 steel mills in Wuan district, Hebei province in northern China had been ordered to shut down operations for up to a month. [ID:nTOE68502P]

"The thinking among investors here is that with those Chinese steel mills closed, product prices could go up," said Lee Won-jae, an analyst at SK Securities.

POSCO, the world's No.4 steelmaker, rose 4.9 percent and Hyundai Steel Co (004020.KS) advanced 4.2 percent.

Smaller producers also gained. Dongkuk Steel Mill Co Ltd (001230.KS) climbed 2.7 percent and Dongbu Steel Co Ltd (016380.KS) rose 1.1 percent.

Key technology and auto stocks slipped after their rally in the previous session.

Hyundai Motor Co (005380.KS), South Korea's No.1 automaker, declined 0.7 percent and and Hynix Semiconductor Inc (000660.KS), the world's No.2 memory chip maker, shed 1.8 percent.

Shipbuilders were helped by gains in Baltic Dry Index .BADI, which tracks the cost of shipping key commodities.

Hyundai Heavy Industries Co Ltd (009540.KS), the world's No.1 shipbuilder, rose 0.7 percent. Daewoo Shipbuilding & Marine Engineering Co Ltd (042660.KS) advanced 0.7 percent. (Reporting by Jungyoun Park; Editing by Chris Lewis)