In Europe, London and Paris slid 0.4% at 7,411.47 points and at 5,103.97, and Frankfurt shed 0.3% at 12,102.21 points. the EURO STOXX 50 closed 0.4% down at 3,431.38 points.
Pyongyang on Sunday conducted its sixth nuclear test — sparking further condemnation and a warning from US Defence Secretary Jim Mattis of a “massive military response” if the United States or its allies were attacked.
Asian stock markets slid along with the South Korean won currency, while the safe haven yen and gold rallied as the news ramped up international tensions.
European losses were less acute.
US markets were closed for the Labor Day holiday.
“Fresh North Korean tensions weigh on financial markets as the probability of a serious US military response escalates,” VTB Capital analyst Neil MacKinnon told AFP.
Seoul said later yesterday there were signs the North is preparing another missile launch, adding it could involve an intercontinental ballistic missile similar to the one fired over Japan.
Later, it said US President Donald Trump and South Korea’s leader Moon Jae-in agreed to remove limits on the payload of the South’s missiles.
Meanwhile, the United States will present a new UN sanctions resolution to punish North Korea, US ambassador Nikki Haley said.
“It seems (North Korean leader) Kim Jong-un shows no signs of conciliation,” said Greg McKenna, chief market strategist at AxiTrader.
North Korea “seems hell-bent on either goading the United States, and its president, into a response or what it thinks will be an embarrassing backdown,” he added. Safe-haven asset gold hit a new 2017 high and was at a near one-year high.
“Gold hit a level not seen since late September 2016 today as the investors flock to the metal on the back of rising tensions in relation to North Korea,” said market analyst David Madden at CMC Markets UK.
“Some of the money that is pouring out of global stock markets is heading for gold as dealers would rather have their funds in a lower-risk asset.”
“There has been a marked increase in North Korean provocation in recent weeks with a series of missile tests being carried out in what is quite clearly a deliberate escalation of international tensions,” added XTB analyst David Cheetham.
Sunday’s test was of a device that could be mounted on an intercontinental missile capable of reaching the United States, North Korea claimed.
“It’s expected this latest North Korea aggression could further intensify geopolitical tensions,” said Stephen Innes, head of Asia-Pacific trading at OANDA.
