Markets extend losses as Korea tensions escalate

Markets extend losses as Korea tensions escalate

Markets extend losses as Korea tensions escalate

It earlier hit $1,291.86, its highest level since June 7.

The U.S. North-Korea tensions add to investor angst that has helped push up gold more than 10 percent this year, even with equities hitting records and the Federal Reserve keen to shrink its balance sheet.

The Swiss franc, by contrast, was on track for its biggest single-day rise against the euro in more than 2 1/2 years.

"Most investors will be completely out of their depth in making any assessment on the (North Korea) situation", said Koon Chow, emerging market FX strategist at fund manager UBP.

The Korean won also continued to skid, sliding 0.3 percent to 1,145 won to the dollar, after earlier sinking to its lowest level in a month.

An index of 15 gold miners tracked by Bloomberg Intelligence climbed 1.1 percent, led by Toronto-based Yamana Gold Inc. Japan's Nikkei 225 slipped 0.3 percent, while Australia's S&P/ASX 200 lost 0.5 percent.

THE QUOTE: "Risk-averse sentiment is dominating global equities markets, and US indices have retraced from record levels over the last two days".

The dollar eased slightly against a basket of major currencies.

Trump continued the back-and-forth with a post on Twitter this morning indicating that the United States is prepared to take military action against North Korea.

Gold prices were nudged away from recent highs as broader risk aversion receded somewhat. "Safe-havens are bid and markets are a little uneasy".

United States producer prices unexpectedly fell in July, recording their biggest drop in almost a year, while another set showed the number of Americans filing for unemployment benefits unexpectedly rose last week.

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

In commodities, USA crude CLcv1 fell 0.67 percent to $49.23 per barrel and Brent LCOcv1 was last at $52.58, down 0.23 percent on the day.

The Japanese yen strengthened by 0.5 per cent to around 109.70 per dollar.

The yen is often sought in times of geopolitical tension, partly because Japan has a big current account surplus, and it being the world's biggest creditor nation, there is an assumption Japanese investors may repatriate their foreign holdings in times of heightened global uncertainty.

The lightly weighted utilities sector (+0.3%) was the only group to finish the day in positive territory.

Stocks going ex-dividend included BT, Royal Dutch Shell, BP, Lloyds, and pharma companies GSK and AstraZeneca, taking around 41 points off the index.

Yields on core government debt fell.

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

"Trump's comments about North Korea have created nervousness and the fear is if the President really means what he said: "fire and fury"," said Naeem Aslam, chief market analyst at Think Markets in London.

In commodities, crude oil lost momentum after rising overnight on data pointing to declining US inventories. Brent crude, used to price global oils, rose 20 cents to $52.10 a barrel in London.

The Japanese yen hit an eight-week high against the US dollar, while spot gold also reached a two-month high.

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