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Cape Town - Investors reached for safe haven assets including gold and the yen and stocks fell after North Korea ratcheted up its threats against the US.
The euro rallied as strong manufacturing data buoyed sentiment before German voters head for the polls on Sunday.
Treasury yields retreated and the dollar fell the most in two weeks after North Korea’s Kim Jong Un promised the “highest level of hard-line” countermeasures against the US and his foreign minister suggested that could mean testing a hydrogen bomb in the Pacific Ocean.
The Stoxx Europe 600 Index edged lower as a rout in base metals and iron ore deepened, weighing on mining shares, and S&P 500 futures also dropped following equities across most of Asia.
The euro headed back toward $1.20 after data indicated the common-currency region is on track for its best quarterly growth since 2015. WTI crude halted its rally above $50 a barrel as OPEC members gathered in Vienna.
Manufacturing PMIs from Germany and France and a composite eurozone private-sector activity index provided support for European policy makers as they consider scaling back stimulus. But the focus on monetary-policy that has dominated market attention this week now looks under threat as fears about North Korea surface yet again.
Elsewhere, UK Prime Minister Theresa May is set to give a key speech on her Brexit strategy on Friday in Florence. And Germany goes to the polls on Sunday, with Chancellor Angela Merkel expected to secure a fourth term, although she may not win an outright majority.
What to watch out as the week comes to an end:
• The UK will pay into the EU until 2020, Theresa May will say in a landmark speech in Florence, a person familiar said.
• Angela Merkel is poised to win a fourth term as German Chancellor on Sunday, but may not get an overall majority with her existing partners.
• OPEC prepares to meet in Vienna today.
• There’s mixed signals on whether they’ll discuss deeper or longer cuts.
• US September preliminary Markit PMI data, which are predicted to show an acceleration in manufacturing and a slight cooling in services growth.
• New Zealand heads to the polls on Saturday.
Here are the main moves in markets:
Stocks
• The Stoxx Europe 600 Index fell 0.1% as of 10:34, the biggest fall in a week.
• The UK’s FTSE 100 Index fell 0.1%.
• Germany’s DAX Index declined 0.1%, the first retreat in a week.
• The MSCI All-Country World Index advanced 0.1%.
• Futures on the S&P 500 Index sank 0.2%.
Currencies
• The Bloomberg Dollar Spot Index sank 0.4%, the biggest dip in more than two weeks.
• The euro climbed 0.4% to $1.1994, the strongest in two weeks.
• The British pound declined 0.1% to $1.3571.
• The Japanese yen jumped 0.4% to 111.99 per dollar, the first advance in more than a week.
Bonds
• The yield on 10-year Treasuries decreased two basis points to 2.26%, the first retreat in more than a week.
• Germany’s 10-year yield advanced less than one basis point to 0.46%.
• Britain’s 10-year yield gained less than one basis point to 1.375%.
Commodities
• West Texas Intermediate crude fell 0.1% to $50.50 a barrel.
• Gold climbed 0.4% to $1 296.82 an ounce, the biggest increase in more than a week.
• Copper fell 0.4% to $2.92 a pound, the lowest in more than five weeks.
• Iron ore futures on SGX AsiaClear in Singapore dropped 0.9% to $62.27 a metric ton, adding to a 6.3% plunge on Thursday.
Asia
• Japan’s Topix index fell 0.3% at the close in Tokyo and South Korea’s Kospi index slid 0.7%.
• Australia’s S&P/ASX 200 Index added 0.5%.
• Hong Kong’s Hang Seng Index lost 0.8% and the Shanghai Composite Index dropped 0.2%.
• Taiwan’s Taiex index fell 1.2%, the biggest slide in Asia.
• Hon Hai Precision Industry is heading for its biggest weekly loss since October 2014, with some analysts saying early sales of Apple’s new iPhone 8 are slower than for previous models.
• The MSCI Asia Pacific Index declined 0.3%.
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