Korean tensions keep yen near eight-week highs

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NORTH KOREA: President Donald Trump warned North Korea of "fire and fury" this week in response to recent threats from Pyongyang, which said it was examining plans for attacking Guam, a US territory in the Pacific with a military base. The Russell 2000 index of smaller-company stocks gave up 10 points, or 0.8 percent, to 1,399. The Korean won also continued to skid, down 0.45% to 1,147.2, falling below its 200-day moving average for the first time in a month.

USA gold futures for December delivery rose 0.2 percent to $1,291.80 per ounce.

United States investors saw Tillerson's comments as evidence that the stand-off between Washington and Pyongyang would be settled by diplomacy rather than by military means.

Jonathan Ernst / Reuters U.S. President Donald Trump speaks about North Korea during an opioid-related briefing at Trump's golf estate in Bedminster, New Jersey, U.S., August 8. Bond and gold prices, traditional havens for nervous investors, were little changed, and the VIX, a measure of how much volatility investors expect in stocks, fell 3.3 percent following a 44.4 percent jump the day before.

North Korea responded with a statement by its official KCNA news agency claiming Trump is "driving" the Korean peninsula to the "brink of a nuclear war".

"I will tell you this, North Korea better get their act together or they're going to be in trouble like few nations ever have been in trouble in this world", Trump said. The precious metal is often seen as a safe haven for investors during times of uncertainty.

Shanghai posted its biggest one-day drop since December while Seoul stocks again ended deep in negative territory.

Emerging market stocks lost 1.27 per cent. MSCI's broadest index of Asia-Pacific shares outside Japan closed 1.47 per cent lower.

The Dow Jones industrial average closed up 14 points, a gain of 0.07 percent, the Nasdaq composite rose almost 40 points or 0.64 percent and the S&P 500 gained 3 points or 0.13 percent.

Speculative positions in USA gold futures remain subdued, said UBS strategist Joni Teves.

"But looking ahead, unless we start to see a conflict breakout or a major stock market correction, (gold) is capped at $1,295, (although) the upside at the moment is the favoured direction".

Markets in Italy, France and Germany also saw declines.

CURRENCIES: The dollar fell to 109.96 yen from 110.48 yen late Tuesday.

Benchmark US 10-year notes last rose 6/32 in price to yield 2.1905 per cent, from 2.211 per cent late on Thursday. "Indeed, the biggest increases in the price of gold have occurred when the U.S. bombed Libya in 1986, in the wake of the Gulf War in 1990, and, more recently, when ISIS attacks put oil supplies in the Middle East at risk".

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