August 9, 2017 / 7:47 PM / 13 days ago

Global Markets: North Korea nerves rattle stocks, lift gold, yen

A foreign currency dealer is pictured between the Japanese and the U.S flags at a dealing room in Tokyo December 12, 2008.Yuriko Nakao/Files

NEW YORK (Reuters) - 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.

MSCI's gauge of stocks across the globe shed 0.77 percent, on track for its third straight day of declines as it pulled further back from all-time highs.

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

North Korea said it was completing plans to fire four intermediate-range missiles over Japan to land near the U.S. Pacific island territory of Guam in an unusually detailed threat that further heightened tensions with the United States.

The rise in geopolitical tensions this week, which heightened after U.S. President Donald Trump on Tuesday warned North Korea that it would face "fire and fury" if it threatened the United States, has drawn investor attention away from second-quarter corporate earnings season, which is winding down.

"The story today is North Korea and there was nothing in the earnings that was bullish enough to pull people away from focusing on North Korea," said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.

The Dow Jones Industrial Average fell 94.55 points, or 0.43 percent, to 21,954.15, the S&P 500 lost 19.51 points, or 0.79 percent, to 2,454.51 and the Nasdaq Composite dropped 76.39 points, or 1.2 percent, to 6,275.94.

Shares of U.S. department stores Kohl's and Macy's were weak after their results.

The pan-European FTSEurofirst 300 index lost 1.19 percent.

Shares of staffing firm Adecco slumped 6.4 percent after its results.

In currencies, the yen strengthened 0.64 percent versus the greenback at 109.37 per dollar.

"The yen is the big story really. Risk aversion is still very much a concern for markets," said Shaun Osborne, chief currency strategist, at Scotiabank in Toronto.

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

The dollar weakened after news that U.S. producer prices unexpectedly fell in July, recording their biggest drop in nearly a year and pointing to a further moderation in inflation that could delay a Federal Reserve interest rate increase.

U.S. Treasury long-dated yields dropped to six-week lows, pressured by U.S.-North Korea tensions and the weak data that further reduced expectations of an interest rate hike in December.

Benchmark 10-year notes last rose 5/32 in price to yield 2.2255 percent, from 2.242 percent late on Wednesday.

The 30-year bond last rose 5/32 in price to yield 2.8107 percent, from 2.818 percent late on Wednesday.

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

Spot gold added 0.7 percent to $1,285.70 an ounce.

"For now, the uptrend is very much intact in gold, reacting to external geopolitical events," said Jonathan Butler, commodities analyst at Mitsubishi in London.

Additional reporting by Saqib Iqbal Ahmed in New York, Marc Jones and Eric Onstad in London; Editing by Catherine Evans and Nick Zieminski

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