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Global markets jarred by North Korea fears


North Korean leader Kim Jong-un. Photo: EPA/KCNA

World equity markets were lower Friday on the back of simmering tensions between the United States and North Korea, 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 opened tentatively higher as consumer inflation data showed signs of life after months of weakening price pressure.

"Equities look set to end this week on a downer, as geopolitical uncertainty regarding North Korea shakes volatility from its 2017 slumber," said Accendon Markets analyst Mike van Dulken. 

"This has taken equities from recent highs, dragging metals and oil with them, the preference for safe havens sending gold and silver to two-month highs and reviving interest in bonds."

Markets reacted with dismay to 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.

"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," said Oanda analyst Craig Erlam . 

"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."

Geopolitics aside, investors would also focus on US economic data and monetary policy, with inflation data being released and two Federal Reserve policymakers making an appearance, 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 $1,291 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.

(AFP)

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