Asian stocks mostly lower on growing unease over North Korea

Donald Trump's stand-off with North Korea is having a bearing on the markets

Titled "Reckless game over the Korean Peninsula runs risk of real war", the editorial suggested China will stay neutral if North Korea strikes first, but will intervene if the U.S.is the first mover.

Analysts said yields, which move inversely to prices, could fall further if the geopolitical tensions continue to rise - even if central bankers in the United States continue to talk of raising interest rates or scaling back stimulus programmes.

In the first four days of the week, the Standard & Poor's 500 index swung from marking its latest record high to posting its biggest single-day drop in almost three months.

In a note sent to clients late on Thursday, the USA bank predicted the single currency would rise to $1.25 in the first quarter of next year and reach parity with sterling for the first time.

Subdued U.S. inflation has stirred doubts about the chances of another Fed interest rate hike this year, which have weighed on the dollar.

But although USA equities on Wednesday managed to close only slightly down even after Trump's warning that "fire and fury" would rain on North Korea, on Thursday the chickens came home to roost on Wall Street.

The pan-European FTSEurofirst 300 index lost 1.01 per cent and MSCI's gauge of stocks across the globe shed 0.26 per cent for a weekly loss of 1.6 per cent, the largest since the week to November 4. The Shanghai Composite Index lost 0.2 percent to 3,275.57 and Hong Kong's Hang Seng was off 0.3 percent at 27,757.09.

US stocks fell sharply on Thursday, with the Dow slipping more than 100 points, as lackluster results from retailers Macy's and Kohl's added to investor nervousness over escalating tensions between the United States and North Korea.

"Pretty remarkable, perhaps even extraordinary, considering", said Tim Ash, strategist at fund manager BlueBay.

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In Europe, Britain's FTSE 100 was down 1.1 percent to 7,306, while France's CAC 40 fell 1.1 percent to 5,058.

Materials, a sector that includes gold producers and other resource-based companies, was the lone gainer among the index's 10 main sectors, rising 0.7 percent.

The Swiss franc and Japanese yen are often sought in times of geopolitical tension or global financial stress, partly because both countries have big current account surpluses.

US stocks closed higher on Friday as Wall Street clawed back from a sharp decline in the previous session but the market still posted a weekly loss on lingering geopolitical uncertainties.

Looking at currency movements during the Asian session, the yen continued strengthening against the dollar, with the pair trading below the 110 level at 109.96 ahead of European trading.

The price of gold also surged for the second day in a row as the December bullion contract advanced US$10.80 to US$1,290.10 an ounce. Financials .SPSY fell the most, down about 1 percent. It was on course for a weekly rise of about 5%, the biggest such gain since July 2016.

Markets had seen a tentative recovery in risk appetite in United States and early Asian trading, but as the war of words resumed Asian stocks dropped back and London, Frankfurt and Paris all lost 0.5 to 1.2 per cent.

Oil prices rose nearly half a percent in today's trading following a bigger-than-expected drop in USA crude inventories.

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