Seoul: Seoul shares closed higher Friday as investors regained confidence in the artificial intelligence (AI) sector, with slower-than-expected U.S. inflation data further boosting market sentiment. The local currency closed higher against the greenback. The benchmark Korea Composite Stock Price Index (KOSPI) gained 26.04 points, or 0.65 percent, to close at 4,020.55.

According to Yonhap News Agency, trade volume was moderate at 426 million shares worth 15.7 trillion won (US$10.6 billion), with gainers outpacing losers 604 to 276. Foreigners sold a net 799.5 billion won worth of local shares, and individuals offloaded a net 77.8 billion won. Institutions purchased a net 858 billion won.

Investors cheered the latest earnings report of U.S. chipmaker Micron Technology, which beat market expectations, easing concerns over an AI bubble sparked by reports that Oracle is facing challenges in raising funds for its data center. Analysts noted that the U.S. consumer price index (CPI) for November increased just 2.7 percent from a year earlier, inducing investors to seek risky assets, despite the data lacking full coverage due to the federal government shutdown.

"The slower-than-expected U.S. CPI data has led to hope over a rate cut (by the Federal Reserve)," Seo Sang-young, an analyst at Mirae Asset Securities, said. Carmakers closed higher, with local industry leader Hyundai Motor increasing 2.21 percent to 288,500 won, and its smaller affiliate Kia rising 0.5 percent to 121,000 won. Defense giant Hanwha Aerospace surged 3.88 percent to 884,000 won.

Leading search engine operator Naver moved up 2.17 percent to 235,500 won, and Kakao added 1.93 percent to 58,200 won. However, top tech giant Samsung Electronics lost 1.21 percent to 106,300 won, while its local chipmaking rival SK hynix slipped 0.91 percent to 547,000 won. Leading battery maker LG Energy Solution added 0.13 percent to 379,000 won.

The local currency was quoted at 1,476.3 won against the greenback at 3:30 p.m., up 2 won from the previous session. Bond prices, which move inversely to yields, ended lower. The yield on three-year Treasurys gained 4.3 basis points to 3.01 percent, and the return on the benchmark five-year government bonds added 4.4 basis points to 3.24 percent.