North Korea talk drags stocks lower; gold, yen rise

Gold prices XAU= rose 0.2 percent to $1,287.30 an ounce, after surging over 2 percent in the previous two sessions to a two-month high.

In New Zealand, the Kiwi Dollar edged higher after the central bank there left rates unchanged at the current 1.75%.

Escalating tensions over North Korea's nuclear ambitions rattled investors Thursday, helping to pull global share benchmarks lower.

Simmering tensions between the U.S. and North Korea have come back to the boil in recent days after Pyongyang disclosed plans to fire missiles over Japan to land near America's Pacific territory of Guam.

European stock markets fell further in opening trade on Friday on intensifying fears over North Korea, dealers said. The reclusive state raised the stakes further with a detailed plan to send a salvo of missiles towards the U.S. territory of Guam.

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

Mounting tensions lifted USA defense stocks.

"I'll tell you why, and they should be very nervous".

Shortly after this announcement, North Korea said it was "carefully examining" the idea of a missile strike on Guam, a U.S. Pacific territory, Reuters reported citing the North's state-run KCNA.

Stock markets extend losses at open
The market was waiting for U.S. consumer inflation data on Friday that would offer more clues about future Fed decisions. The pan-European Stoxx 600 ended over 1% lower to a five-month low with nearly all sectors in negative territory.

Declining issues outnumbered advancing ones on the NYSE by a 2.29-to-1 ratio; on Nasdaq, a 2.47-to-1 ratio favoured decliners. 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.

Later on Friday, investors will look to US July consumer price data for hints on the Fed's policy outlook and near-term moves in the dollar. They are looking for confirmation that the Fed is sticking with plans for a possible December interest rate hike.

At 12:28 p.m. ET (1628 GMT), the Dow Jones Industrial Average was down 52.87 points, or 0.24 percent, at 22,032.47, the S&P 500 was down 2.8 points, or 0.11 percent, at 2,472.12.

Manuel Oliveri of Credit Agricole said about the single currency,"The euro has become more correlated to risk in recent weeks and sentiment is still a bit cautious", adding "though the euro upside trend is likely to remain intact over the longer term".

North Korea has said it may attack Guam in retaliation.

Japan's Nikkei had been down more than 1% overnight while South Korean shares also slipped.

"We would now be careful with a whiff of risk aversion in the air and, by extension, also stay away from shorts in the rates market", RBC's global macro strategist Peter Schaffrik said.

US crude rose 0.43 percent to $48.80 per barrel and Brent was last at $52.01, up 0.21 percent on the day. On commodities markets, oil advanced with U.S. crude nearing $50 a barrel after figures from industry group the American Petroleum Institute showed a sharp decrease in stockpiles, a clear indication of the easing supply glut.

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