'Stock markets in Europe are still under pressure because of the heightened tensions surrounding North Korea, ' said David Madden, market analyst at CMC Markets UK.
In early trading, France's CAC 40 fell 1.5 percent to 5,141.37 points and Germany's DAX lost 1.2 percent to 12,144.54. The FTSE 250 ended down 0.8%, or 154.63 points, at 19,544.79, and down 2.1% for the week as a whole. Core prices had also been expected to climb by 0.2 percent.
"Love or loathe him, Trump isn't one to back down from a confrontation, so it's perhaps not a surprise that things have escalated".
Korea said it is examining an operational plan for firing a ballistic missile towards Guam.
But shares of defence-related companies rose, with LIG Nex1 Co Ltd up almost 5 per cent and Firstec up 3 per cent. Washington has warned it is ready to use force if need be to stop North Korea's ballistic missile and nuclear programmes but that it prefers global diplomatic action, including sanctions.
"The market's dent only lasted for a week in April when tension rose between them after North Korea launched a missile". "They may increase the market's volatility for a couple of days".
European stocks also fell sharply Friday, leaving the Stoxx Europe 600 with its worst weekly decline since November, just before the US presidential election was held.
Stocks are opening lower on Wall Street as investors find little to like in the latest batch of corporate earnings.
The Australian and New Zealand dollars also came under pressure on Wednesday as the flare-up in tensions over North Korea sparked a shift to currencies considered safer harbours, most notably the Japanese yen. The consumer discretionary index .SPLRCD was one of its biggest losers with a 0.47 per cent drop. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped by 2.3 basis points to 2.189 percent. The number of people quitting their jobs also dropped.
"We assume markets will move on if it remains purely a war of words but the selloff looks durable", he added.
FED WATCH: Investors looked ahead to an appearance Thursday by Bill Dudley, president of the U.S. Federal Reserve Bank of NY, for signs of the Fed's outlook on the economy.
ANALYST'S TAKE: The U.S.jobs figure "was through the roof" and the NFIB survey "painted a much better picture for the U.S. economy than most believed", Stephen Innes of OANDA said in a report.
Japan and South Korea vowed a strong reaction if the North were to go through with the plan.
USA crude rose 0.43 percent to $48.80 per barrel and Brent was last at $52.01, up 0.21 percent on the day. "Indeed, the biggest increases in the price of gold have occurred when the USA 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".