Asian stocks turned lower on Thursday as investors fretted about the latest flare-up of tensions between the United States and North Korea, sending Seoul shares skidding to two-month lows even as the previous day's rush into safe-haven assets appeared to slow.
Most recently, Pyongyang called President Trump's "fire and fury" threats a "load of nonsense", and detailed plans on a potential missile strike against Guam - which prompted warnings from South Korea and Japan.
European markets were also struggling amid the simmering political stand-off, with the Cac 40 in France dropping 1.4% and Germany's Dax tumbling by 1.1%.
Equity markets had traded with a soft tone in Europe and there was a sharp increase in selling pressure in NY with the S&P 500 index declining by close to 1.0%.
"What we're seeing today is political tensions over North Korea and the United States. making people nervous", said Robert Pavlik, chief market strategist at Boston Private Wealth in NY.
The Swiss franc, another currency that has the same safe-haven appeal as the yen in times of geopolitical anxiety, strengthened with the dollar falling to 0.9688 francs.
The price of gold rose 1% to 1,274.39 United States dollars per ounce, with Fresnillo and Randgold Resources up 72p to 1,544p and 200p to 7,380p respectively.
Financial stocks underperformed after US Treasury yields fell as bond prices rose in a flight to safety by nervous investors.
The Nikkei dropped 1.3 percent to 19,738.71, the weakest closing level since May 31, but defence equipment makers attracted buyers, with Ishikawa Seisakusho soaring 5.0 percent, Howa Machinery rising 1.1 percent and Tokyo Keiki advancing 1.4 percent.
"We're not very oversold yet so the market still has more downside left to it".
Wall Street's downbeat start followed a slide in major stock indexes in Europe and Asia.
"The stand-off between the two countries has encouraged dealers to dump stocks and seek safe haven investments like gold".
Overseas markets were also lower Wednesday.
ENERGY: Benchmark U.S. crude lost 15 cents to $49.02 per barrel in electronic trading on the New York Mercantile Exchange. The Nasdaq composite fell 35 points, or 0.5 percent, to 6,336.
USA crude rose 0.69 per cent to US$49.51 per barrel and Brent was last at US$52.66, up 1 per cent on the day. Brent crude, used to price worldwide oils, gained 56 cents to $52.70 in London. USA gold futures gained 1.50 per cent to US$1,281.50 an ounce.
Gold rose $16.70, or 1.3 percent, to settle at $1,279.30 an ounce. Lockheed Martin, Raytheon, General Dynamics and Northrop Grumman all rose and the Dow Jones U.S. defense index was up 1.6 percent after hitting a record high.
Macy's M.N shares closed down 10.2 per cent and Kohl's KSS.N fell nearly 6 per cent as the companies continued to report a drop in quarterly same-store sales, stoking concerns that their turnarounds may still be a long way off.