On the currency markets, the pound was marginally higher against the U.S. dollar at 1.30 and up 0.1% versus the euro at 1.11.
South Korea's KOSPI fell 1.8 percent to a 9 1/2-week low, taking its losses this week to almost 2.7 percent.
Pyongyang said it was examining plans for attacking Guam, a US territory in the Pacific with a military base.
President Donald Trump warned North Korea again on Thursday not to strike Guam or USA allies, saying his earlier threat to unleash "fire and fury" on Pyongyang if it launched an attack may not have been tough enough. The market was waiting f or US consumer inflation data on Friday that would offer more clues about future Fed decisions.
Many markets have climbed to record or multi-year highs, leaving them vulnerable to a sell-off.
US stocks slip amid heightened US-North Korea tensions
The Korean won also continued to skid, sliding 0.4 percent to 1,146.2, below its 200-day moving average.
The S&P is trading near its most expensive valuation level since 2004, as measured by the price-to-12-month forward earnings ratio.
"We're not very oversold yet so the market still has more downside left to it", said Robert Pavlik, chief market strategist at Boston Private Wealth in NY.
The CBOE Volatility Index, the most widely followed barometer of expected near-term US stock market volatility, rose the most in about 12 weeks.
The index ended up 4.93 points at 16.04, the highest level since November 8, when Trump was elected president. Equity screens were also awash with red in Asia as investors fled to safe haven assets after US President Donald Trump doubled down on his North Korea rhetoric.More news: Does Tottenham's trophy drought end this season?
Earlier, the dollar slipped as low as 108.91 yen, its weakest level since June 14, when the greenback fell as low as 108.81 yen.
The biggest fallers were G4S down 24.7p to 305.9p, Standard Chartered down 20.9p to 783.1p, Prudential down 44p to 1,841.5p, Shire down 92p to 3,945p.
"European shares are trading once again lower. continuing their slide on the back of ever more increasing tensions between North Korea and the USA", added analyst Markus Huber at City of London Markets.
The dollar was up 0.05 percent to 109.25 yen, after earlier falling to a sixteen-week low following data showing USA consumer prices rose less than expected in July.
Spot gold prices were unchanged at $1,286.27 a ounce, after touching a two-month high earlier.More news: Bartosiak: Trading Tesla's (TSLA) Earnings with Options
Disappointing economic data releases weighed on both sides of the Atlantic today with a negative goods trade balance for the United Kingdom (-0.1% versus expectations of 1.4%), higher unemployment claims from the USA (244,000) and also a negative month-on-month PPI figure for the U.S. (-0.1%).
Markets remained concerned over the risk of a U.S. first-strike against North Korean nuclear facilities.
They were down 0.7 percent at $48.24 per barrel, on track for a weekly loss of 2.7 percent. The figure showed a decline of 1.1% versus expectations for a 0.5% drop and reversing from a 1.9% gain in May. TripAdvisor shares shed $1.75, or 4.4 percent, to $37.80.More news: Lawyers want Penn State live-in frat adviser to testify in pledge death
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