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Global markets jarred by North Korea fears

London - World equity markets spiralled lower on Friday on the back of simmering tensions between the United States and North Korea, dealers said.

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

"It could be another rough day for European equities," said ETX Capital analyst Neil Wilson.
"Korean tensions are pretty much the only horse in town."

Markets reacted with dismay to his fresh warning Thursday that his earlier threat to unleash "fire and fury" on the reclusive nuclear-armed state may not have been "tough enough".

The reclusive state raised the stakes further on Thursday with a detailed plan to send a salvo of missiles towards the US territory of Guam.

"European shares are ... continuing their slide on the back of ever more increasing tensions between North Korea and the US," added analyst Markus Huber at City of London Markets.

"While not necessary unexpected - as the US had to respond to threats made by North Korea that they will fire rockets due to land just off the coast of Guam soon - new comments by Trump propelled stocks lower."

Wall Street indices suffered their biggest losses in nearly three months on Thursday, while the dollar struggled to recover from eight-week yen lows.

With Japanese markets closed for a public holiday, Hong Kong led the downward charge in Asia-Pacific as the Hang Seng lost more than 2%.

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 and the won continued its slide against the dollar.

Gold, another classic safe haven asset, was trading at around $1 288 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.

US producer prices Thursday disappointed, as traders await consumer price inflation figures later on Friday.

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

"As has been the case for much of the week, markets are heading into the weekend on a negative note as traders seek safety ahead of what could be a potential risky couple of days," noted Oanda analyst Craig Erlam.

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 on Friday, giving figures that cast further doubt on the cartel's pledge to cut output to raise prices.

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