South Korean stocks traded nearly flat late Tuesday morning as investors remained cautious ahead of a key Fed policy meeting, analysts said.  

The benchmark Korea Composite Stock Price Index added 0.34 point, or 0.02 percent, to 1,928.16.   Local shares started 0.38 percent higher following the overnight gains on Wall Street buoyed by a rebound in oil prices.   

But the index pared its earlier gains as investors were nervously awaiting the rate decision by the Fed.

The U.S. central bank is widely expected to raise the borrowing cost for the first time in nearly a decade.   

Foreign investors led the sell-off, offsetting the solid buying by institutions.     

Blue chip tech shares buttressed the index.

Top cap Samsung Electronics rose 0.79 percent, and chipmaker SK Hynix surged 1.72 percent.    

But chemicals and energy shares were trading in negative terrain, with LG Chem tumbling 2.63 percent and the country's No. 3 refiner S-Oil shedding 1.38 percent.   

The local currency was changing hands at 1,182.7 won against the U.S. dollar, up 2 won from Monday's close. (Yonhap)