Swiss franc, yen rise as North Korea tensions brew

President Donald Trump speaks in the Roosevelt Room of the White House in Washington Wednesday Aug. 2 2017

President Donald Trump speaks in the Roosevelt Room of the White House in Washington Wednesday Aug. 2 2017

Gains among technology companies helped snap a three-day losing streak for US stocks Friday, though the market ended with its worst weekly loss since March. The S&P 500 and Dow were both coming off record highs.

US equities steepened their losses late in the session after President Donald Trump said his earlier warnings to North Korea may not have been tough enough.

The Standard & Poor's 500 index fell 5.99 points, or 0.2 percent, to 2,474.92.

The Nasdaq composite lost 13.31 points, or 0.2 percent, to 6,370.46.

MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.5 percent in its third session of declines, with Australia down 1.4 percent.

The recovery fit a recent pattern of investors using dips to put more money in stocks.

At close United States stocks' retreat was mild as Dow and S&P 500 barely changed.

"We take comfort that numerous smaller markets are growing strongly, offsetting declines in the key markets Italy, Russia (weather impact) and Nigeria (price increases)", they added.

Defensive assets drew support from fresh tensions surrounding North Korea after reports that the Pyongyang regime had developed a miniaturised nuclear warhead which could be deployed on a long-range missile.

Earlier, Trump warned North Korea on Tuesday it would face "fire and fury" if it threatens the United States, prompting the nuclear-armed nation to say it was considering firing missiles at Guam, a US-held Pacific island. The CBOE Volatility Index, also known as Wall Street's "fear gauge", jumped 15 percent to approach a two-month high. It's still the highest it's been since May.

And in a textbook-type cross-asset move toward safety in times of trouble, the Japanese yen hit an eight-week high against the USA dollar while spot gold also reached a two-month high.

Head of commodity strategy at Saxo Bank, Ole Hansen, told Reuters he sees further rises for gold, albeit under a ceiling: "The market hates uncertainty and that's certainly what we have now". However, the idea that the Fed hike the Fed funds rate above the estimated neutral Fed funds rate (the rate that is neither stimulatory nor restrictive for growth and inflation), which now sits at 1.28%, is certainly something to consider. In particular, July headline inflation came in at 0.1% month-month in July, falling short of expectations for CPI growth to stand at 0.2% - still this was better than June's 0.0%.

The Dow fell for eight straight days back in March.

Canadian Tire Corp Ltd rose 3.4 percent to C$146.65.

Nevsun Resources Ltd offset some of the material group's gains, plunging 18.4 percent to C$2.685 after the company reported disappointing quarterly results. However, the volatility bulls have been burnt before and there is just no conviction to push the index higher, at this stage. It is poised to end the week down 1.9 per cent. The FTSE 250 company said that, as part of the transaction, it agreed to pay £24m for a 75% stake in a newly-formed company, whose assets will consist of all the franchisee's operations being 25 existing Domino's stores in London. Oil prices rose after a report showed US refineries processed record amounts of crude in the latest week, eating into inventories. It added 39 cents to $49.56 a barrel overnight.

People walk past an electronic board showing stock prices outside a brokerage at a business district in Tokyo, Japan, January 23, 2017. Natural gas was also flat at $2.98 per 1,000 cubic feet.

U.S. gold futures for December delivery was mostly unchanged at $1,290.50 per ounce. "We believe the recent recovery should run out of steam once the United States dollar regains strength", said Norbert Rücker, Julius Baer's head of Macro & Commodity research. Copper rose 1 cent to $2.91 a pound.

Global benchmark Brent also fell 0.9 per cent to $51.44, after Thursday's 1.5 per cent drop. Two weeks ago it saw its biggest weakly fall against the euro since the start of 2015.

In European markets, the French CAC 40 was down 0.3% and Frankfurt's DAX 30 shed 0.8%.

The UK blue-chip index closed 113 points, or 1.5%, lower at 7,385, steadily losing ground as the trading session wore on.

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