Safe-haven currencies rise as North Korea tensions brew

European Shares Plummet

"For quite some time the market hasn't really reacted to things on the Korean peninsula because we know from the past it is largely North Korean sabre-rattling, and it may yet be".

Gold held steady at two-month high with spot gold rising 0.1 percent to $1,287.83 per ounce, putting the precious metal on pace for its biggest weekly gains since April.

The CBOE Volatility Index - a measure of investors' expectations for swings in the S&P 500 over the next 30 days - surged Thursday to its highest level since U.S. Election Day.

The most traditional safe havens at times of mounting geopolitical unrest are the Swiss franc and gold, and both were big movers on Wednesday.

In the eurozone, the Paris CAC 40 dropped nearly 0.7 per cent to 5,081.92 points compared with the closing level on Thursday.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.2 percent in early trading, while Japan's Nikkei was 1.2 percent lower as the stronger yen sapped investors' appetite.

USA stock futures ESc1 were marginally softer on Friday.

The greenback slipped 0.83 per cent to a near two-week low against the Swiss franc and fell to 110.11 yen, its lowest in almost two months against the Japanese currency. It was down 0.1 percent at 109.07 yen JPY= , after retreating 0.8 percent on Thursday.

Political tensions continue to weigh on world stocks
Significant strength was also visible among software stocks, as reflected by the 1.2% gain posted by the Dow Jones Software Index. Avis Budget Group slumped 9.9 percent after the auto rental company cut its guidance following a weak second quarter.

It was 0.2 percent lower at 1.1310 francs, compared with highs of 1.1537 francs hit a week ago.

In Europe, equities dived, with London losing 0.8 per cent, while Frankfurt and Paris shed 1.3 per cent and 1.8 per cent respectively.

The Swiss franc was on pace for its biggest single-day rise against the euro since the Swiss National Bank removed its cap on the currency in January 2015.

Many world stock markets have hit record or multi-year highs in recent weeks, leaving them vulnerable to a sell-off, and the tensions have proved the trigger. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped by 2.3 basis points to 2.189 percent.

This morning gold had reached $1,286.33 while gold for delivery in December rose 0.8% to $1,290.10.

"The market hates uncertainty and that's certainly what we have now", said Ole Hansen, head of commodity strategy at Saxo Bank.

Gartman's comments follow Bridgewater Associates founder Ray Dalio's gold recommendation: "We can also say that if the above things go badly, it would seem that gold (more than other safe haven assets like the dollar, yen, and treasuries) would benefit", Dalio wrote in a LinkedIn blog post. Brent, the worldwide benchmark, was last down 25 cents a barrel at $51.89.

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