Stocks, Dollar, Extend Slide as U.S., N. Korea Tensions Intensify

Stocks, Dollar, Extend Slide as U.S., N. Korea Tensions Intensify

Stocks, Dollar, Extend Slide as U.S., N. Korea Tensions Intensify

Gold is beating US stocks this year as a war of words between President Donald Trump and North Korea, along with a weaker dollar, boosts demand for haven assets.

In Europe, the pan-continental STOXX 600 index fell 0.9 percent, with falls deepening after a vehicle rammed a group of soldiers in Paris, injuring six, in what officials said was a suspected terrorist attack. The umbrella financials group slipped 0.3 percent.

Wall Street's fear gauge-the CBOE Volatility Index or the VIX-jumped 36 percent to 15.06.

U.S. Treasury long-dated yields dropped to six-week lows, pressured by U.S.

Markets had stabilised earlier as Tillerson sought to play down tensions, saying "there is any imminent threat" to Guam, and expressed hope for diplomacy would prevail. "But as past incidents involving the Korean Peninsula have shown, the impact on financial markets tends to fade away over a span of few days".

Markets had seen a tentative recovery in risk appetite in US and early Asian trading, but as the war of words resumed Asian stocks dropped back and London .FTSE , Frankfurt .GDAXI and Paris .FCHI all lost 0.5-1.2 percent.

The benchmark US yield US10YT=RR on Thursday was just above 2.2 percent, at its lowest level since late June, as investors bought up Treasuries, a classic safe harbor.

Overnight, the dollar was roughly unchanged against a basket of global currencies on Thursday, as the flight to safety trade continued in the wake of rising geopolitical tensions between the US and North Korea while weak inflation data added to downside momentum.

The declines have jolted markets from a period of calm, when stock indexes around the world climbed to records and volatility remained historically low.

"The markets in general are very on edge and they're very leery about risk", Mariann Montagne, a portfolio manager at Gradient Investments, told Bloomberg.

The Swiss franc reversed a two-week losing streak and gained 1.1 percent to as firm as 0.9611 per dollar.

Against the dollar the euro was 0.16 per cent lower.

Growing tension between the U.S. and North Korea boosted the Swiss franc, the Japanese yen, gold and government bonds as investors sought out traditional safe havens at a time of geopolitical uncertainty. The Nasdaq composite fell 35 points, or 0.5 percent, to 6,336.

USA producer prices unexpectedly recorded their biggest drop in almost a year, and the number of Americans filing for unemployment benefits unexpectedly rose last week.

A trader works on the floor of the New York Stock Exchange shortly after the opening bell in New York, U.S., June 27, 2017.

The bid for safe havens also pressured the Australian and New Zealand dollars. Viacom slid 93 cents, or 3 percent, to $29.84.

US crude was down 0.9 percent at $48.16 per barrel, on track for a weekly loss of 2.9 percent. Bent crude, the global benchmark, rose 19 cents to $52.33 a barrel.

ETF Securities commodities strategist Nitesh Shah believes continued sabre-rattling between the two nuclear powers could take gold prices higher still.

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