Trump stresses United States nuclear capabalities

Tensions over North Korea weigh on stocks but boost gold

Trump on Tuesday warned North Korea, saying that Pyongyang will face "fire and fury" if it continues to threaten the U.S.

The FTSE 100 index of leading British shares was 0.6 per cent lower.

Following Trump's remarks, North Korea on Wednesday said it was "carefully examining" plans for a missile attack on the U.S. Pacific territory of Guam, which is home to a large U.S. military base.

"Trump's response was aggressive and that's why the (stock) market turned lower", said Ken Polcari, director of the NYSE floor division at O'Neil Securities.

Platinum ended the day higher 0.15% at $974 per once with palladium down 0.91%.

All three major stock indexes dropped 0.2 per cent at the close, with the Dow Jones Industrial Average finishing at 22,085.34, halting a almost two-week run of closing records.

The Swiss franc rose 0.01 percent versus the greenback, the most since late June, at 0.96 per dollar. Economists had expected productivity to increase by 0.7 percent. 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.

The threat from North Korea's nuclear and missile programs has been a top foreign policy priority for Trump since taking office in January, but the dangers posed by North Korea have taken center stage since the country test-fired two intercontinental ballistic missiles last month. A strong jobs report last Friday gave the dollar index .DXY its strongest daily performance this year.

Safe-haven buying drove the Japanese Yen higher against the U.S. Dollar on Tuesday, following a volatile trading session.

France's CAC dropped 1.6pc and Germany's DAX fell 1.3pc. The euro slid to $1.1742 from $1.1752.

Against the greenback, the Swiss franc eased about 0.1 percent to 0.9645 per dollar, having surged about 1.1 percent on Wednesday.

Gold saw a $10 move higher on Wednesday as tensions mounted between the United States and North Korea over comments made by both sides. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dropped 4.2 basis points to 2.241 percent. Brent crude, used to price worldwide oils, gained 16 cents to $52.30 in London.

Elected officials in Guam are reassuring constituents that the USA territory is safe following North Korea's claim that it is examining its plan for "making an enveloping fire" around the strategically important Pacific island.

In energy markets, oil prices edged higher after the latest report from the Energy Information Administration (EIA) showed a reduction of 6.5m barrels of crude inventories held in the US.

The VIX closed 1.4 percent higher but at the lowest level of the day at 11.11, after rising as high as 12.63.

By the London close, the precious metal had given up some of those gains to trade up 0.88% on the day at $1,273.

Copper CMCU3 rose 1.05 percent to $6,481.50 a tonne.

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