US stocks slip amid heightened US-North Korea tensions

Traders work on the floor of the New York Stock Exchange

US stock indexes looked set to open lower on Wednesday as investors shunned risky assets following escalating tensions between North Korea and the United States.

US stock indexes follow global markets lower as threatening remarks from Pres. Trump and North Korea's Kim Jong Un raise tensions; S&P and Dow -0.3%, Nasdaq -0.7%.

The Dow Jones Industrial Average .DJI closed down 204.69 points, or 0.93 percent, at 21,844.01, the S&P 500 .SPX lost 35.81 points, or 1.45 percent, to end the session at 2,438.21 and the Nasdaq Composite .IXIC fell 135.46 points, or 2.13 percent, to 6,216.87.

London's benchmark FTSE 100 index fell back 1.1 percent to 7,415.78 points, driven by losses in the commodity sector.

The CBOE Volatility Index, the most widely followed barometer of expected near-term US stock market volatility, hit its highest mark since November 8, when Trump was elected president.

The limited fall in the price of Asian stocks suggests that stockholders are not unduly alarmed, experts said.

The damage inflicted on world stocks this week by the escalating war of words over North Korea topped $1-trillion on Friday, as investors again took cover in the yen, the Swiss franc, gold and government bonds.

Gold rose to its highest level in nearly two months, while the Swiss franc increased by more than 1% against the U.S. dollar and saw its biggest one-day gain against the euro in more than two and a half years.

In the eurozone, the Paris CAC 40 lost 0.5 percent compared with the closing level on Wednesday.

Concerns over geopolitical risks probably led investors to pare back bearish bets against the yen and the Swiss franc, said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore, referring to the gains in those currencies on Wednesday. "We have no choice but to acknowledge the risks, and to report that financial markets are reacting to them".

The dollar extended losses against the yen to hit a new two-month low.

Meanwhile, 10-year U.S. Treasury yields edged higher to around 2.25 percent after slipping overnight. The NASDAQ Composite Index fell 0.21% and closed the day at 6,370.46.

CURRENCIES: The dollar slipped to 109.05 yen from 109.20 while the euro weakened to $1.1763 from $1.1773.

The dollar was steady against a basket of six major currencies at 93.412 after falling 0.2 percent on Thursday, with disappointing USA inflation and jobs data adding to the greenback's woes. On Aug. 3 volume reached $8.61 million, second only to Wednesday's activity.

"More likely than anything else, the price action was a function of an overextended US equity market that has been in need for a healthy correction off record highs", LMAX Exchange analysts said in a morning note.

The remarks followed a new report asserting that USA intelligence has assessed that Pyongyang has successfully produced a nuclear warhead that can fit inside its missiles.

US crude oil crude futures CLc1 were little changed at $48.59 per barrel.

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