Investors take a breath as US Stocks end winning streak

While you were sleeping: 'Fire and fury' hits stocks

Aug 10 (Reuters) - The S&P 500 index was on track for its first daily drop of more than 1 percent in nearly three months on Thursday as investors grew cautious over escalating tensions between the United States and North Korea.

The Dow Jones industrial average fell 36 points, or 0.2 percent, to 22,048.

Equity markets around the world had fallen as the war of words between the USA and North Korea escalated, with the Dow recording its second negative close, although its 0.2 per cent loss was smaller than in other bourses. "You're less than 2 percent off the high for the S&P heading into a weekend where uncertainty with North Korea still lingers", said Lerner.

In Europe, the pan-continental STOXX 600 index fell 0.9 percent, with falls deepening after a auto rammed a group of soldiers in Paris, injuring six, in what officials said was a suspected terrorist attack. Copper lost 0.39 percent to $6,455.00 a tonne.

North Korea on Thursday morning local time said "sound dialogue is not possible" with President. Investors "have lost the taste for risk when North Korea has threatened to launch four medium range missiles over Japan and crashed near the american island of Guam, in the Pacific, wielding a threat extremely seriously", summarised analysts at National Bank Financial.

Benchmark U.S. 10-year notes rose 9/32 in price to yield 2.2494 percent, from 2.282 percent late on Tuesday.

On Thursday, New York Fed President William Dudley said he expects sluggish United States inflation to rise over the next several months while the hot labor market gets even hotter. Output was forecast to drop 0.6 percent. Humana rose $4.74, or 1.9 percent, to $254.96. Australia's S&P/ASX 200 edged down almost 0.1 percent. Fresnillo's share price is 2.51 percent up at 1,515.00p, while shares in Randgold are changing hands 2.52 percent higher at 7,360.25p.

In Europe, France's CAC 40 fell 1.6 percent to 5,135 while Germany's DAX was down 1.3 percent at 12,133. Reuters reported that the telecom conglomerate and its US cable unit are in the early stages of working on an offer to buy Charter Communications Inc. Tokyo's Nikkei 225 tumbled 1.3 percent, while Seoul's Kospi fell 1.1 percent.

Spot gold rose 0.3 percent to $1,264.50 per ounce at 0324 GMT, while US gold futures for December delivery rose 0.6 percent to $1,270.40 per ounce.

Oil prices closed lower after an early rally faded. The Korean won is also suffering - the USA dollar is up 0.58% against the currency at the time of writing (7.30 a.m. GMT/1.30 a.m. ET), while the pound is up 0.77% against the won, and the euro is up 0.53% against it. Brent crude, used to price worldwide oils, rose 20 cents to $52.10 a barrel in London. Hong Kong's Hang Seng dipped 1.6 percent to 27,314.74. Wholesale gasoline dropped 2 cents to $1.60 a gallon, while heating oil shed 2 cents to $1.63 a gallon.

The dollar slipped to 109.04 yen from 109.26 late Thursday.