Equities fall on rising tension between US & North Korea

Traders work on the floor of the NYSE in New York

Traders work on the floor of the New York Stock Exchange in New York U.S

Gold got an extra boost after data showed USA consumer prices rose less than expected in July, pointing to benign inflation that could make the Federal Reserve cautious about raising interest rates again this year.

The data comes amid tepid inflation that has remained below the Federal Reserve's 2 percent target, despite low unemployment.

Meanwhile, the Russell 2000 index of small-cap stocks looked poised for a weekly drop of 2.8%, its biggest one-week decline since February 2016.

"Military solutions are now fully in place, locked and loaded, should North Korea act unwisely".

Trump ratcheted up his rhetoric against North Korea and its leader on Thursday, warning Pyongyang against attacking Guam or US allies after it disclosed plans to fire missiles over Japan to land near the US Pacific territory.

"If you strip away what's going on in North Korea, and if you strip away what's going on in Washington, which are things that are tougher to predict, the economy, the global recovery, earnings, it all paints a very positive picture for the rest of the year", Kravetz said.

The S&P/TSX composite index was down 91.01 points to 15,126.32, after 90 minutes of trading.

The dollar index, which measures against a basket of currencies, fell 0.05 per cent.

Nordstrom shares were up 1.63 percent at $45.60 following the apparel retailer's better-than-expected quarterly same-store sales.

For now, the dollar remains on the back foot, pulling back 0.1% to 0.9635 Swiss francs today, after dropping as much as 1.2% to a two-week low overnight. Hong Kong's Hang Seng Index plunged by 2%, while South Korea's Kospi Index slumped by 1.7%.

"Pretty remarkable, perhaps even extraordinary, considering", said Tim Ash, strategist at fund manager BlueBay. Investors, meanwhile, are fleeing to more stable investment markets.

Stocks around the world fell sharply on Thursday and investors moved into the yen, gold and other safe-haven assets amid more aggressive talk between the United States and North Korea.

Market participants are looking to Friday's U.S. Consumer Price Index data.

IG's opening calls suggest that the Footsie will start the day 0.57 percent lower at 7,348 points.

Market participants are also nervous about escalating tensions between the US and North Korea.

"If we break above this downtrend, then we potentially open up the region up to $1,300, the recent highs we saw in April and June", Butler said.

The 30-year bond last rose 6/32 in price to yield 2.7847 percent, from 2.794 percent late on Thursday.

The euro eased 0.1 per cent to $1.1766, staying below a high of around $1.1910 set last week, the euro's strongest level in 2-1/2 years.

U.S. gold futures for December delivery climbed 1 percent to $1,291.80 per ounce. Markets in greater China mirrored the slide in global equities.

Benchmark U.S. crude rose 23 cents to settle at $48.82 a barrel on the on the New York Mercantile Exchange.

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