"The war of words taking place between the United States and North Korea at the moment, which includes very real threats of action, is taking its toll on investor sentiment".
The pan-European FTSEurofirst 300 index .fteu3 lost 1.01 percent and MSCI's gauge of stocks across the globe .miwd00000pus shed 0.12 percent.
The Standard & Poor's 500 index fell 7 points, or 0.3 percent, to 2,467.
European equity markets continued to lose ground on Thursday which provided further net support to gold, especially with bond yields tending to drift lower.More news: Ronald Koeman confident of securing Gylfi Sigurdsson for Everton
A rise in the yen, which often draws safe-haven buying in times of uncertainty, is bad for Japanese exporters because it shrinks the value of their repatriated profits.
But although US equities on Wednesday managed to close only slightly down even after Trump's warning that "fire and fury" would rain on North Korea, on Thursday the chickens came home to roost on Wall Street.
With Japanese markets closed for a public holiday, Hong Kong led the downward charge in Asia-Pacific as the Hang Seng lost more than two percent.
Many world stock markets have hit record or multiyear highs in recent weeks, leaving them vulnerable to a sell-off, and the tensions over North Korea proved to be the trigger. The data suggested little sign of inflationary pressure within the economy.
Overall, earnings growth for MSCI Europe companies was tracking 24 percent, Thomson Reuters data showed, while MSCI Euro zone companies were seeing 16 percent earnings growth for the second quarter.
The Korean won continued to fall versus the dollar, down 0.13 percent to 1,143.5 on Friday for a 1.6 percent decline on the week.More news: China slams US Navy's new 'provocation' in South China Sea
"It's a big move in the context of what we've seen in the course of this year, but in a bigger picture perspective the levels are still relatively moderate", said Harper.
Earlier in the session, it marked its highest since June 8 at $1,288.92 an ounce.
Disappointing earnings also helped pull the market lower Wednesday.
Benchmark 10-year notes US10YT=RR last rose 5/32 in price to yield 2.2255 percent, from 2.242 percent late on Wednesday.
In oil, the price of Brent crude sunk by 0.5% to 51.65 U.S. dollars a barrel amid concerns about over supply in the market.
USA credit card processing company Vantiv secured a deal to buy British-based rival Worldpay for 8 billion pounds ($10.4 billion) Wednesday in a bid to create a $29 billion global payments powerhouse.More news: In Silicon Valley, Defense Secretary Promotes Diplomatic Solution To North Korea
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