Seoul shares trimmed their steep declines late Friday morning, buoyed by retail bargain hunting even as elevated oil prices fueled concerns over potential US Federal Reserve interest rate hikes.

The benchmark Korea Composite Stock Price Index (KOSPI) opened sharply lower, down 3.29%, before paring some of those losses. As of 11:20 a.m., the index stood at 6,876.74, down 157.18 points, or 2.23%, from the previous session.

Individual investors emerged as net buyers, purchasing 1.68 trillion won (approximately $1.24 billion) worth of shares, while institutional and foreign investors offloaded a net 1.04 trillion won and 1.31 trillion won, respectively.

The overnight surge in global oil prices, driven by escalating tensions in the Middle East, triggered a sell-off on Wall Street. The Dow Jones Industrial Average slipped 0.6%, and the tech-heavy Nasdaq Composite fell 0.65%.

Adding to the unease, US producer prices rose 0.4% month-on-month in August. Investors are now waiting for the consumer price report due Friday, which could offer fresh clues about the Fed's future rate path.

Back in Seoul, technology names led the market downturn. Market bellwether Samsung Electronics dropped 4%, while chipmaking peer SK Hynix shed 3.45%.

Among other major decliners, top automaker Hyundai Motor fell 2.31%, and battery maker LG Energy Solution slid 2.81%.

On the upside, defense giant Hanwha Aerospace edged up 0.75%, and state-run utility Korea Gas rose 0.82%.

The Korean won was trading at 1,347.05 per US dollar as of 11:20 a.m., up 2.85 won from the previous session's close.