Russian Federation and Germany weigh in on North Korea war rhetoric

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       Swiss stocks were among those under pressure in Wednesday’s trade

Shutterstock Swiss stocks were among those under pressure in Wednesday’s trade

And I will tell you this: "North Korea better get their act together or they're going to be in trouble like few nations ever have been in trouble in this world", Trump told reporters in New Jersey, where he was meeting with his national security team.

The North Korean state media, describing President Donald Trump's warning of "fire and fury" as a "load of nonsense" said they aim to develop a plan by mid-August to launch four missiles at the us territory of Guam.

The yen is perceived as a safe haven because Japan is the world's biggest creditor country and investors there have tended to repatriate funds in times of crisis.

The Swiss franc, the other traditional safety-play among currencies, has benefited too. Two weeks ago it saw its biggest weekly fall against the euro since the start of 2015.

Market watchers said the demand for gold bars is expected to continue increasing for the time being, until the tension on the Korean Peninsula settles down.

"Heightened geopolitical risks overnight have seen the markets flip from risk-on to risk-off and we have to wait and see how long this move runs before adding some positions", said Viraj Patel, an FX strategist at ING in London.

The CBOE Volatility Index, the most widely followed barometer of expected near-term US stock market volatility, hit its highest mark since November 8, when Trump was elected president.

Japanese markets were closed for a holiday but the tense mood dragged Asian shares lower and an MSCI index of stocks across the globe was on track to post its largest weekly drop since the week before Donald Trump won the USA presidential election in November. "I'm looking selectively at the pullbacks, but my gut is that we could be in for a bumpy ride for the next couple of months or so".

The pan-European FTSEurofirst 300 index lost 1.06 percent and MSCI's gauge of stocks across the globe shed 0.17 percent.

The Dow Jones Industrial Average (.DJI) fell 204.69 points, or 0.93 percent, to close at 21,844.01, the S&P 500 (.SPX) lost 35.81 points, or 1.45 percent, to 2,438.21 and the Nasdaq Composite (.IXIC) dropped 135.46 points, or 2.13 percent, to 6,216.87.

"What has changed this time is that the scary threats and war of words between the USA and North Korea have intensified to the point that markets can't ignore it", said Shane Oliver, head of investment strategy at AMP Capital in Sydney.

Benchmark 10-year notes last rose 5/32 in price to yield 2.194 percent, from 2.211 percent late on Thursday.

Spot gold was up 0.1% at $1,287 per ounce by 2.17pm GMT, set for its biggest weekly gain since April.

Away from the geopolitical drama, US inflation data is due at 1330 GMT.

Subdued U.S. inflation has stirred doubts about the chances of another Fed interest rate hike this year, weighing on the greenback.

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