Published: Sun, August 13, 2017
Economy | By Annette Adams

European stocks fall as caution over geopolitical tensions lingers

European stocks fall as caution over geopolitical tensions lingers

Gold prices held steady after touching their highest in over two months on Friday and were on track for a weekly gain, buoyed as rising tensions between the United States and North Korea triggered safe-haven buying.

After threatening to visit "fire and fury" on North Korea, President Donald Trump said that maybe the warning "wasn't tough enough".

ANALYST TAKE: "Equities look set to end this week on a downer, as geopolitical uncertainty regarding North Korea shakes volatility from its 2017 slumber", said Mike van Dulken, head of Research at Accendo Markets. "The U.S. president at a [golf] links again let out a load of nonsense about 'fire and fury, ' failing to grasp the on-going grave situation".

Instead, investors turned to the traditional safe-haven assets sought in troubled times, the Japanese yen strengthened 0.5 percent to 109.73 to the dollar JPY=. USA gold futures gained 0.26 percent to $1,293.50 an ounce.

"More likely than anything else, the price action was a function of an overextended US equity market that has been in need for a healthy correction off record highs", LMAX Exchange analysts said in a morning note.

On the economic front, data is expected to show that USA consumer prices likely rose in July after being unchanged the prior month.

The Labor Department said its consumer price index inched up by 0.1% in July after coming in unchanged in June.

Nordstrom shares were up 1.63 percent at $45.60 following the apparel retailer's better-than-expected quarterly same-store sales.

At 10:57 a.m. ET (1457 GMT), the Dow Jones Industrial Average .DJI was up 54.38 points, or 0.25 percent, at 21,898.39, the S&P 500 .SPX was up 8.69 points, or 0.35 percent, at 2,446.90.

The dollar index, which measures the U.S. currency against a basket of major peers, slipped 0.1 percent.DXY as U.S. Treasury yields fell.

Many world stock markets have hit record or multi-year highs in recent weeks, leaving them vulnerable to a sell-off, and the tensions over North Korea have proved the trigger.

Tokyo's Nikkei 225 tumbled 1.3 percent to 19,740.12 and Seoul's Kospi fell 0.8 percent to 2,375.88. The Nasdaq composite lost 36 points, or 0.6 percent, to 6,315. Ten-year US yields dropped 4 basis points to 2.242 percent US10YT=RR and German equivalents fell 3 bps to 0.43 percent DE10YT=TWEB, a six-week low.

U.S. producer prices Thursday disappointed, as traders await consumer price inflation figures later Friday. The release hurt gold demand, as a stronger dollar makes commodities more expensive for buyers using weaker currencies.

Oil prices rose before a report expected to show US crude stocks fell for a sixth week.

Prices rose by just 0.1% last month, below expectations, with the annual inflation rate up to 1.7% from 1.6%. Brent crude dipped 5 cents to $52.18 a barrel. The euro edged down to $1.1726 from $1.1751.

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