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New York - World stock markets mostly rose on Tuesday, extending the previous day's rally as fears receded over a potential clash between the United States and North Korea.
Investors have cashed out of haven assets, like gold and the Japanese yen, and ploughed back into riskier assets like equities, with the US dollar also gaining ground.
Asian stocks extended a relief rally into a second day, after Pyongyang appeared to put on ice its plan to launch missiles near Guam, and after a strong showing on Wall Street overnight.
Europe followed suit, with Frankfurt also emboldened by news that the German economy grew 0.6% in the second quarter. That, however, marked a slowdown from the 0.7% expansion in the first quarter.
"The rhetoric between the United States and North Korea appears to have softened somewhat, helping risk market sentiment," NFS Macro analyst Nick Stamenkovic told AFP.
"In addition, robust German second-quarter GDP data highlights the favourable fundamental backdrop for European equities.
"Indeed, it appears investors have perceived last week's sell-off as an opportunity to raise exposure to stocks."
Traders also breathed a sigh of relief as senior US officials dialled down tensions with North Korea, after a war of words had sent stocks tumbling last week.
North Korean leader Kim Jong-Un hinted on Tuesday that he would hold off on a plan to test-fire missiles towards the US Pacific island territory of Guam, saying he would "watch a little more the foolish and stupid conduct of the Yankees".
US stocks finished little changed, as a strong retail sales report for July was offset by some disappointing earnings reports from retailers.
The dollar rose after New York Federal Reserve Bank President William Dudley indicated that another interest rate increase this year was likely and suggested the central bank would reveal plans to reduce its balance sheet next month.
The British pound showed particular weakness against its peers after inflation data showed that price rises have been very muted despite post-Brexit weakness in sterling, pretty much ruling out a Bank of England interest hike anytime soon, analysts said.
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