Wall Street tumbles on North Korea worries

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Traders took heart in a measure of US consumer prices that increased only slightly in July, pointing to benign inflation that could make the Federal Reserve cautious about raising interest rates again this year.

Japanese markets were closed for a holiday but the in-demand yen powered on, hitting an eight-week high of 108.91 yen to the dollar, adding to its biggest weekly gain since May.

After Tuesday's news that North Korea had developed a nuclear warhead capable of fitting inside its long-range missiles, Trump promised "fire and fury" will meet any threat from the secretive country.

Baker Avenue's Lip said the US market was higher due to "bargain hunters", but "there's more room for the market to come down".

The Dow Jones Industrial Average rose 44.33 points, or 0.2 percent, to 21,888.34, the S&P 500 gained 6.01 points, or 0.25 percent, to 2,444.22 and the Nasdaq Composite added 32.10 points, or 0.52 percent, to 6,248.97.

In overseas trading, stock markets across the Asia-Pacific region saw continued weakness during trading on Friday.

The index's losses mirrored global markets, which fell after incendiary words between the United States and North Korea. "Pretty remarkable, perhaps even extraordinary, considering", said fund manager BlueBay strategist Tim Ash.

Many markets have recently climbed to record or multiyear highs, leaving them vulnerable to a sell-off.

"Risk aversion is still very much a concern for markets", said Shaun Osborne, chief currency strategist, at Scotiabank in Toronto.

Europe's main London, Frankfurt and Paris markets started between 0.5 and 1.1 percent lower and Germany's ultra-safe 10-year government bonds were trading at their highest prices since June.


The yen is perceived as a safe haven because Japan is the world's biggest creditor country and investors there have tended to repatriate funds in times of crisis.

European stocks have fallen for a third day on Friday and look headed for their worst week since early November a year ago, as US President Donald Trump's rhetoric on North Korea over the past few days made investors risk averse.

The major U.S. index futures are pointing to a higher opening on Friday, as some traders may look to pick up stocks at reduced levels following the pullback seen over the past few sessions.

"If the data continues to come in on the softer side, the market might start to price the Fed staying on hold this year", said Sireen Harajli, FX strategist at Mizuho in NY.

On the currency front, the USA dollar is trading at 108.82 yen compared to the 109.20 yen it fetched at the close of NY trading on Thursday. While the German DAX Index closed just below the unchanged line, the U.K.'s FTSE 100 Index and the French CAC 40 Index both tumbled by 1.1 percent.

"On many occasions, we've also heard from the Russians, and from Russian oil producers, that once the deal is complete and free production reigns again that Russia will prime the pump", said Greg McKenna, an analyst at AxiTrader.

"There are four more (inflation) prints between now and the December FOMC meeting and we expect the Fed to remain data-dependent, if a touch more cautious", said TD Securities in a research note. 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.

Spot gold prices were little changed at $1,286.05/oz, after touching a two-month high earlier.

Gold futures went up 16.70 dollars or 1.33 percent to close at USD 1,274.60 per troy ounce at the COMEX division of the New York Mercantile Exchange.

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