Seoul: Seoul shares fell sharply Friday as surging oil prices heightened inflation concerns, with investors awaiting key U.S. inflation data for clues about the Federal Reserve's future interest rate policy. The Korean won rose against the U.S. dollar.

According to Yonhap News Agency, after opening 3.29 percent lower, the benchmark Korea Composite Stock Price Index (KOSPI) narrowed its losses to close 124.01 points, or 1.76 percent, down at 6,909.91. Trade volume was moderate at 265.92 million shares worth 19.39 trillion won (US$14.4 billion), with losers outnumbering gainers 473 to 368.

Individuals bought a net 1.87 trillion won worth of stocks, while institutions and foreigners sold a net 1.22 trillion won and 2.29 trillion won, respectively. Overnight, surging oil prices sparked a sell-off in U.S. stocks amid escalating tensions in the Middle East.

The Dow Jones Industrial Average fell 0.6 percent, while the tech-heavy Nasdaq Composite declined 0.65 percent. All eyes are on the U.S. consumer price index (CPI) report due out Friday (U.S. time) to gauge whether higher energy costs are adding to inflationary pressures.