Seoul: Seoul stocks plunged by more than 3 percent Thursday as investors closely watch the developments in peace talks between the United States and Iran. The Korean won fell against the U.S. dollar.

According to Yonhap News Agency, the benchmark Korea Composite Stock Price Index (KOSPI) fell 181.75 points, or 3.22 percent, to 5,460.46. Trade volume was moderate at 902.9 million shares worth 24.1 trillion won (US$15.9 billion). Losers outnumbered winners 662 to 226.

Foreign investors continued their selling spree by offloading a net 3.1 trillion won, while institutional investors sold off a net 338.7 billion won. In contrast, individual investors purchased a net 3.06 trillion won.

"Uncertainties over the Middle East situation and the semiconductor market weighed on the market," said Lee Kyoung-min, an analyst from Daishin Securities. On Wednesday (local time), the U.S. and Iran have diverged on talks over their monthlong war. The White House has claimed talks with Tehran are proceeding apace, while a top Iranian official said there were exchanges of "messages" but questioned negotiations.

Semiconductors also faced selling pressure after Google's new artificial intelligence (AI) compression algorithm, TurboQuant, sparked concerns that demand for memory chips may decrease in the near future.