Shares slip, yen and gold gain as Korea tensions escalate

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

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

Brewing tensions between the USA and North Korea put investors in a selling mood again Thursday, dragging US stocks lower for the third day in a row.

"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.

The CBOE Volatility Index, the most widely followed barometer of expected near-term stock market volatility, was up 1.03 points at 11.98 points, its highest level in a month.

Gold hit its highest levels in two months on Thursday as the USA and North Korea exchanged more threats, prompting investors to buy bullion as a safe-haven asset.

South Korea's won currency dropped 0.9% against the dollar to its lowest close since July 13.

"The people of this country should be very comfortable, and I will tell you this: If North Korea does anything in terms of even thinking about attack, of anybody that we love or we represent or our allies or us, they can be very, very nervous", Trump said.

Investor focus now turns to Friday's U.S. consumer price index data.

The S&P 500 dropped the most since May and MSCI's gauge of stocks across the globe .MIWD00000PUS lost 1.1 percent in its third straight day of declines, as it pulled further back from all-time highs.

Energy stocks fell along with the price of crude oil. Silver also rose, gaining 43 cents, or 2.6 percent, to $16.82 an ounce.

Adding to the modest losses posted in the two previous sessions, stocks moved sharply lower over the course of the trading day on Thursday. July's 0.1 percent increase in consumer prices suggests that the Federal Reserve may be less likely to raise interest rates next month.

(Employees push a trolley laden with crates of one kilogram gold bars at the YLG Bullion International Co. headquarters in Bangkok, Thailand.Getty Images/Dario Pignatelli/Bloomberg) Gold has rallied 2.3% this week on the heels of renewed tension with North Korea. Futures pointed to further declines on Wall Street, with S&P 500 futures down 0.3 per cent at 2,465.70 and Dow futures falling 0.2 per cent to 21,986.00.

An index of 15 gold miners tracked by Bloomberg Intelligence climbed 1.1 percent, led by Toronto-based Yamana Gold Inc. Major indexes in Asia closed lower. The yield on three-year Treasurys fell 2.0 basis points to 1.804 percent and the return on benchmark five-year government bonds shed 2.0 basis points to 2.004 percent.

Shares of Kohl's were down 2.05 percent in premarket trading, while Macy's fell 0.91 percent after the department store operators reported a fall in sales.

BONDS: Bond prices rose.

In currencies, the yen rose 0.8 percent versus the greenback at 109.2 per dollar, the strongest level for the Japanese currency since mid June. Disappointing company earnings also helped pull the market lower, with consumer-focused companies and technology stocks among the biggest decliners.

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