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Global markets jarred by North Korea fears


World equity markets were lower Friday on the back of simmering tensions between the United States and North Korea, but firmer prices on Wall Street helped put a floor under the losses in Europe, dealers said.

Traders' screens were in the red in Asia and Europe as investors fled to safe haven assets after US President Donald Trump doubled down on his North Korea rhetoric.

But in the US, Wall Street edged higher as investors waded back into the market following a three-day sell-off. And that helped limit the losses in Europe.

The tentative gains "suggest that the headline shock value pertaining to the US-North Korea standoff is starting to dissipate, which is to say actual action will now speak much louder than words," said analyst Patrick O'Hare.

Nevertheless, the geopolitical uncertainty looks set to continue, dealers said, following Trump's fresh warning Thursday that his earlier threat to unleash "fire and fury" on the reclusive nuclear-armed state may not have been "tough enough".

North Korea raised the stakes further on Thursday with a detailed plan to send a salvo of missiles towards the US Pacific territory of Guam.

"The war of words between Donald Trump and North Korean officials has stepped up in recent days and has put investors on edge, prompting a more risk averse approach in the markets," said Oanda analyst Craig Erlam.

Geopolitics aside, investors were also focused on US economic data and monetary policy, following the release of inflation data, Erlam said.

Rising costs for housing, medical care and food helped push the Consumer Price Index (CPI) up 0.1 percent in July, seasonally adjusted, after no change in June and a 0.1 decrease in May, the US Labor Department said.

With Japanese markets closed for a public holiday, Hong Kong led the downward charge in Asia-Pacific as the Hang Seng lost more than two percent.

The index was also dragged lower after Beijing ordered probes into three major Chinese social networking platforms over outlawed content.

Shanghai posted its biggest one-day drop since December while Seoul stocks again ended deep in negative territory.

Gold, another classic safe haven asset, was trading at around $1,292 per ounce, up more than two percent this week and near a nine-week high.

- 'Traders seek safety' -

The greenback also came under pressure after New York Federal Reserve President William Dudley cautioned it would "take some time" for US inflation to reach the bank's two percent target.

However, markets remained focused on geopolitical crisis, as angry threats from Washington and Pyongyang stoke fears of a catastrophic miscalculation with global consequences.

In commodities, oil prices slid on doubts over whether OPEC production cuts are draining a global supply glut.

OPEC pumped more oil in July as global oil supplies rose for the third straight month, the IEA said Friday, giving figures that cast further doubt on the cartel's pledge to cut output to raise prices.

- Key figures around 1545 GMT -

New York - Dow: UP 0.2 percent at 21,890.54 points

London - FTSE 100: DOWN 1.1 percent at 7,309.96 (close)

Frankfurt - DAX 30: FLAT at 12,014 (close)

Paris - CAC 40: DOWN 1.1 percent at 5,060.92 (close)

EURO STOXX 50: DOWN 0.8 percent at 3,406.34 (close)

Tokyo - Nikkei 225: Closed for holiday

Hong Kong - Hang Seng: DOWN 2.0 percent at 26,883.51 (close)

Shanghai - Composite: DOWN 1.6 percent at 3,208.54 (close)

Euro/dollar: FLAT at $1.1792

Pound/dollar: UP at $1.2982 from $1.2963

Dollar/yen: UP at 109.13 yen from 109.06

Oil - West Texas Intermediate: DOWN 22 cents at $48.37 per barrel

Oil - Brent North Sea: DOWN 26 cents at $51.64