Stock markets slip as North Korea tensions build

Stock markets have turned lower as investors reacted nervously to renewed tensions between the US and North Korea.

London's FTSE 100 was nearly 1% down during morning trading with share indices in Germany, France and Italy also in the red.

Anxiety among investors on Wednesday was compounded after a group of soldiers in Paris was hit by car in what was said to be a deliberate act.

Japan's Nikkei had been down more than 1% overnight while South Korean shares also slipped.

Investors piled into safe-haven assets such as US government bonds, gold and the Japanese yen and sold off shares.

The jitters came as Pyongyang said it was considering plans to attack the US Pacific territory of Guam - while Donald Trump threatened to react with "fire and fury".

Markets have tended to shrug off North Korea's sabre-rattling in the past, dismissing it as bluster, but the latest tensions have added to jitters.

Tomoaki Fujii, head of investment research at Akatsuki Securities in Tokyo, said: "The sell-off caused by geopolitical tensions on North Korea will likely be short-lived as long as both Trump and Kim Jong Un keep making feints against each other and neither takes military action.

"The market's dent only lasted for a week in April when tension rose between them after North Korea launched a missile.

"Both countries know that there is no turning back once they push the button."

But others believe North Korea has no intention of backing down.

"Tensions will continue to mount and could eventually develop into a 'black swan' event that the markets are not prudently considering," said Steve Hanke, professor of Applied Economics at America's Johns Hopkins University.