In his latest warning to North Korea, U.S. President Donald Trump said on Friday military solutions were "fully in place" and referred to American weapons as being "locked and loaded" should the nuclear-armed nation act "unwisely".
The U.S. blue-chip index is down 1.1% this week and the S&P 500 is 1.6% lower, facing its worst weekly performance since November. The stock fell another 2 cents, or 0.4%, to 5.12 Friday.
But although US equities on Wednesday managed to close only slightly down even after Trump's warning that "fire and fury" would rain on North Korea, on Thursday the chickens came home to roost on Wall Street.
The Swiss franc was on track for its biggest single-day rise against the euro in more than 2 1/2 years.
Almost $1 trillion has been wiped out from global equity markets since tensions were sparked off by Trump's "fire and fury" comments on Tuesday.
"The typical text book trade is that investors rush for safe havens".
Investors are increasingly nervous: The VIX volatility index, a closely-watched "fear gauge", is up 70% since Tuesday.
The VIX rose further on Wednesday, rising as far as 12.11, its highest in nearly a month.
North Korea has since threatened to launch missiles at the USA territory of Guam, and the country previously threatened "all-out war, wiping out all the strongholds of enemies, including the US mainland".
In Europe, the pan-continental STOXX 600 index fell 0.9 per cent, with falls deepening after a vehicle rammed a group of soldiers in Paris, injuring six, in what officials said was a suspected terrorist attack.
Can A New War Finally Kill the Bull Market?
Bullion traders said the gold prices headed north as rising tension between the two countries triggered safe-haven buying. The market also awaited U.S. consumer inflation data on Friday that would offer more clues about the pace of the U.S.
MSCI's main index of Asia-Pacific shares, excluding Japan, was last down 0.6 percent. The stock fell 76 cents to $5.48.
Instead, investors turned to assets that tend to benefit in times of geopolitical and financial stress. Netflix was down 1.8 per cent. Banks and retail chains were also among the big decliners.
The benchmark USA yield on Thursday was just above 2.2 percent, at its lowest level since late June, as investors bought up Treasuries, a classic safe harbor.
The Dow slid as declines in Apple and Goldman Sachs, down 2.3% and 1.7% respectively, outweighed gains in McDonald's and Coca-Cola, up 1.4% and 0.5% respectively.
Yields on core government debt fell.
The data comes amid tepid inflation that has remained below the Fed's 2 percent target, despite low unemployment.
Gold rose 0.6 per cent to $1,268 an ounce.
Apart from the war of words between North Korean Leader Kim Jong Un and Mr. Trump, the market faces fresh uncertainties from central banks and politicians in the second half of 2017.
In Europe, the Stoxx 600 Index fell 1%.
Travel website operator Priceline fell 7.26 per cent, weighing the most on the S&P and the Nasdaq, following a disappointing forecast. It added 39 cents to $49.56 a barrel on Wednesday.
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