Selloff in stocks takes a breather; gold and yen tick up

Traders work on the floor of the New York Stock Exchange

Traders work on the floor of the New York Stock Exchange

The dollar was down 1.2 percent at 0.9627 Swiss francs, while an ounce of gold was 1 percent higher at $1,275.

In New Zealand, the Kiwi Dollar edged higher after the central bank there left rates unchanged at the current 1.75%.

The tentative gains "suggest that the headline shock value pertaining to the US-North Korea standoff is starting to dissipate, which is to say actual action will now speak much louder than words", said Briefing.com analyst Patrick O'Hare.

Volatility gauges from the U.S.to Japan rose after President Donald Trump said in response to a Washington Post report on North Korea's nuclear capabilities that further threats from the country would be met with "fire and fury".

Tokyo's Nikkei index had dropped 1.3% by the time European stock markets opened on Wednesday morning, with similar falls on the German and French bourses. Pyongyang said it was examining plans for attacking Guam, a US territory in the Pacific with a military base. The S&P 500 sank 1.7% from Tuesday to Thursday, the Dow fell 1.1%, and the Nasdaq dropped 2.4%.

"While not necessary unexpected - as the U.S. had to respond to threats made by North Korea that they will fire rockets due to land just off the coast of Guam soon - new comments by Trump propelled stocks lower".

The Nasdaq Composite was up 19.35 points, or 0.31%, at 6 236.22.

"The overnight Korean news has prompted some unwinding of the cheapening trades on the franc that has been going on for some time and though positioning is not stretched by any means, the franc's strength may have room to run", said Timothy Graf, head of macro strategy at State Street Global Markets in London.

Many world stock markets have hit record or multi-year highs in recent weeks, leaving them vulnerable to a sell-off, and the tensions have proved the trigger.

Later on Friday, investors will look to US July consumer price data for hints on the Fed's policy outlook and near-term moves in the dollar.

"Tensions will continue to mount and could eventually develop into a "black swan" event that the markets are not prudently considering", said Steve Hanke, professor of Applied Economics at America's Johns Hopkins University.

Japanese markets were closed for a holiday, but the tense mood dragged Asian shares lower and an MSCI index of stocks across the globe .miwd00000pus was on track to post its largest weekly drop since the week before Donald Trump won the USA presidential election in November. He also said the nuclear-armed nation should be "very, very nervous" if it even thinks about attacking the United States or its allies.

Brent crude LCOc1 was up 30 cents at $53.00 a barrel and US crude was up 22 cents at $49.78. Brent crude, used to price global oils, gained 10 cents to $52.24 in London.

At 12:28 p.m. ET (1628 GMT), the Dow Jones Industrial Average was down 52.87 points, or 0.24 percent, at 22,032.47, the S&P 500 was down 2.8 points, or 0.11 percent, at 2,472.12. South Korea's Kospi also suffered a loss, giving back 0.4%.

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