South Korean equities closed lower for a second consecutive session on Friday, pressured by foreign investor selling as renewed geopolitical tensions in the Middle East sapped risk appetite. South Korea, which relies on the Middle East for the bulk of its crude oil imports, is particularly sensitive to disruptions in regional shipping lanes. The Korean won strengthened against the US dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) opened 1.09 percent higher but reversed course to fall as low as 6,158.73 intraday before closing at 6,258.77, down 37.61 points, or 0.6 percent. The decline followed a 4.58 percent plunge in the prior session driven largely by a sell-off in technology stocks.

Trading volume was light, with 297.18 million shares changing hands valued at 24.3 trillion won ($17.1 billion). Advancing issues outnumbered decliners 552 to 321.

Overnight, US markets also finished lower. The Dow Jones Industrial Average declined 0.85 percent, while the tech-heavy Nasdaq Composite edged down 0.06 percent, as investors weighed uncertainty over a potential agreement between the United States and Iran to reopen the Strait of Hormuz.

Iran has reportedly threatened to block US and Israeli vessels from the strategic waterway and to demand compensation from countries it deems hostile before granting them passage. The Strait of Hormuz is one of the world's most critical energy transit chokepoints, through which roughly a fifth of global oil consumption passes daily, making any disruption a concern for import-dependent economies such as South Korea's.

On the Seoul exchange, foreign investors offloaded a net 858.07 billion won in stocks. Institutional and retail investors were net buyers, purchasing 578.99 billion won and 266.98 billion won, respectively.

Analysts said uncertainty surrounding the strait is likely to keep oil prices elevated, compounding volatility in a market already rattled by concerns surrounding the artificial intelligence trade. Questions about the sustainability of capital spending on AI infrastructure have weighed on semiconductor shares globally in recent sessions, with South Korean chipmakers among those caught in the pullback.

Large-cap stocks posted mixed results. Chipmaker SK hynix fell 4.88 percent to 1,422,000 won, Hyundai Motor declined 1.12 percent to 395,500 won, and Lotte Shopping plunged 12.93 percent to 99,700 won. Hanwha Ocean retreated 1.43 percent to 89,400 won, and Korean Air shed 1.27 percent to 27,150 won.

On the upside, Samsung Electronics gained 0.22 percent to 231,000 won, and Hanwha Aerospace climbed 4.08 percent to 1,097,000 won.

The Korean won was quoted at 1,417.70 against the US dollar as of 3:30 p.m., up 6.4 won from the previous day's stock market close. (Yonhap)