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European Stocks Deepen Declines as North Korea Tensions Linger

12 August 2017

Palladium added 0.4% to $899.80 per ounce and was on track to end the week about 2% higher.

But U.S. stocks regained some lost ground, despite Trump's comments Friday that U.S. weapons are "locked and loaded", ready to respond if North Korea acts "unwisely".

President Donald Trump promised "fire and fury and frankly power, the likes of which this world has never seen before" on Tuesday evening in response to recent threats from North Korea and its leader Kim Jong Un.

Weakness in U.S. Treasury yields may also be supporting the yen, Sweeting said.

If North Korea launches an attack that threatens the US, China should stay neutral, but if the US attacks first and tries to overthrow North Korea's government, China will stop them, a Chinese state-run newspaper has said.

ASIA'S DAY: Earlier, Asia bore the brunt of the mounting geopolitical uncertainty, with South Korea's Kospi index closing down 1.7 percent at 2,319.71 and Hong Kong's Hang Seng ending 2 percent lower at 26,883.51.

Stocks slide on continued concern over tension between United States and North Korea
Crude briefly pared losses in late trading after USA inventories fell more than expected last week. The overall financials group, which accounts for roughly a third of the index slipped 0.9 percent.

The New Zealand dollar was 0.79 lower against the greenback after New Zealand's central bank said it was slightly more uncomfortable with the high level of the local dollar than it had been in May.

An index of 15 gold miners tracked by Bloomberg Intelligence climbed 1.1 per cent, led by Toronto-based Yamana Gold Inc.

Major bank Mitsubishi UFJ fell 1.06 percent at 703 yen.

"Pretty remarkable, perhaps even extraordinary, considering", said Tim Ash, strategist at fund manager BlueBay. The Japanese markets were closed for a holiday.

The sell off in stocks and flight to safety gathered pace in early European trade as the already cool relationship between the U.S. and North Korea turned icy following hard-nosed rhetoric from both nations. Apple was down 2.3 percent, weighing most on the index.

Investors also drew some encouragement from new government data showing USA inflation at the consumer level inched higher last month.

Markets slide, dollar slumps as North Korea fears spike
The US producer prices data was slightly below consensus forecasts with both headline and core prices declining 0.1% on the month. Platinum climbed 0.2 percent to $978.00 per ounce after touching $984.60 during the session, its highest since April 18.

"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.

The Japanese yen strengthened by 0.5% to about 109.70 per dollar.

Sterling was last trading at $1.3009, up 0.27 percent on the day.

Gold is sensitive to moves in USA rates, which lift the opportunity cost of holding non-yielding assets such as bullion.

"This inflation data for the month was not good". Silver fell 0.3% to $17.04 per ounce after hitting $17.24, its highest since June 14, in the previous session. This morning gold had reached $1,286.33 while gold for delivery in December rose 0.8% to $1,290.10.

Oil also regained momentum as data pointed to declining U.S. inventories.

China vows to adhere strictly to United Nations sanctions on North Korea
The US-drafted proposal passed the Security Council 15-0, securing support from North Korean allies China and Russian Federation . USA officials have been adamant there will be no direct meetings with North Koreans in Manila, even among lower-level officials.

United States crude shed 12 cents to $49.05 a barrel, while Brent crude fell 18 cents a barrel at $51.96 a barrel.

European Stocks Deepen Declines as North Korea Tensions Linger