* KB Financial Group slumps on dismal Q2 earnings outlook
* Rechargeable battery firms under pressure
* Hotel Shilla shares rally on more Chinese visitors
SEOUL, July 17 (Reuters) - Seoul shares erased earlier falls to edge up in late morning trade on Wednesday, but gains were capped with investors cautious ahead of key domestic earnings and the Federal Reserve chief's testimony to a congressional panel.
The Korea Composite Stock Price Index was up 0.35 percent at 1,872.82 points by 0217 GMT.
"Caution will dominate in the market today, though substantial falls are not likely either. The market lacks momentum at the moment," said Chang Hee-jong, a market analyst at Daewoo Securities.
Foreign investor buying was modest at a net 6.7 billion Korean won ($5.99 million) worth of stocks, continuing the buying streak for a fifth straight session.
The market's key heavyweights turned up and eked out firm gains. Samsung Electronics Co Ltd, the biggest component on the main KOSPI, was up 0.6 percent. Hyundai Motor Co, the second biggest share, advanced 1.6 percent.
But KB Financial Group Inc shares slumped 3 percent as worries about its second quarter earnings deepened following a negative brokerage report.
KB Financial's second quarter net profit was seen falling nearly 50 percent year-on-year, with net interest margin thinning substantially, said Daishin Securities analyst Choi Chung-uk in a report.
Rechargeable battery makers lagged after shares of U.S. electric carmaker Tesla Motors Inc tumbled 12 percent overnight following a target price downgrade by Goldman Sachs Group Inc which was far below its current share price.
Samsung SDI Co Ltd was up a mere 0.3 percent and LG Chem Ltd shares dipped 0.4 percent.
But upscale hotel and duty free chain operator Hotel Shilla Co Ltd's shares spiked 8.9 percent after Korea Tourism Organization data showed the number of Chinese visitors into South Korea in June jumped 70 percent year-on-year.
Visitors from China accounted for nearly 40 percent of all foreign visitors to South Korea last month, the data showed.
Light emitting diode (LED) and components makers traded firmly, continuing to be lifted by news the South Korean government will ban production and imports of incandescent light bulbs from next year, pointing to higher demand in more energy efficient LED light bulbs.
Seoul Semiconductor Co Ltd rose 1.4 percent and Dongbu Lightec Co Ltd advanced 1 percent.
$1 = 1118.0000 Korean won Reporting by Jungyoun Park; Editing by Jacqueline Wong