The remarks, following North Korea's earlier revelation of a plan to launch a salvo of ballistic missiles toward the U.S. Pacific territory of Guam, gave investors further incentive to take to the sidelines at least in stock markets.
The Dow Jones Industrial Average slid 33.08 (-0.15 percent) to finish at 22,085.34. In 3.08pm trading, the Standard & Poor's 500 Index fell 1 percent. The Nasdaq composite fell 35 points, or 0.5 percent, to 6,336.
He said: "The response that the North Korean nation was considering a missile strike on the U.S. base in Guam was the equivalent of a two fingered response to the USA president, and there is a danger that this war of words between two leaders with large egos could get out of control".
The Labor Department said its Consumer Price Index edged up 0.1 percent last month, which was below the 0.2 percent rise expected by economists polled by Reuters.
Barrick Gold Corp rose 2.1 percent to C$21.7, while Goldcorp Inc rose 0.9 percent to C$16.29.More news: Jamie Carragher insists signing Virgil van Dijk won't solve Liverpool's defensive woes
This week, the S&P 500 started on a stronger note by rising to new record high price levels. The S&P hasn't moved more than 0.5 percent in one day since July and has fallen more than 1 percent only twice this year.
Investors on Thursday scampered to safe-haven assets such as gold and the Swiss franc, helping the precious metal hit a more two-month high.
"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.
Many world stock markets have hit record or multi-year highs in recent weeks, leaving them vulnerable to a selloff, and the tensions over North Korea proved to be the trigger.
The slump comes after more than £27 billion was wiped off the value of blue-chip stocks on Thursday, sending the FTSE 100 to its biggest daily fall since April 18 this year.
Office Depot tumbled 22.4 percent after the office supplies retailer's quarterly results came in below estimates.More news: Trump tells Calvo he's behind Guam "1000%"
Elsewhere in commodities, the September crude contract advanced 20 cents to $49.76 per barrel and the September natural gas contract was up seven cents to $2.95 per mmBTU.
In bond markets, the yield on U.S. Treasuries fell, also pressured by the lowered expectations for a Fed move.
US crude oil tumbled 2% to $48.59/bbl, failing to hold above $50 as a report from OPEC showed crude production among the group's members rose in July.
The overall financials group, which accounts for roughly a third of the index slipped 0.9 percent.
The U.S. dollar fell to 110.48 yen from 110.72 yen late Monday.More news: Marvel's Avengers 4 Is Now Filming!!
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