A lava stream was building up on Friday around the crater of the volcano, which lies about 18km from the central city of Antigua Guatemala, seismology agency INSIVUMEH said.
Some ash plumes reached around 5km into the air, it added.
Authorities have been warning of increased activity around the active volcano this week.
"We have evacuated over 700 people who have spent the night in shelters. We evacuated them as a precaution," disaster agency CONRED said on Friday.
People had been moved from the nearby areas of Escuintla, Sacatepequez and Chimaltenango, it added.
In a report shortly after midnight on Friday, INSIVUMEH said a lava flow could be seen stretching to around 1.2km.
"This continues to accumulate in an unstable manner around the crater and in the high parts of the ravines, which could collapse and cause more pyroclastic flows," it said.
Fuego is known for its frequent activity. In June 2018, its most violent eruption in about four decades killed more than 200 people.
Around the size of the US state of Tennessee, the Central American nation is home to 37 volcanoes, though many of them are considered dormant or extinct.
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