The Russell 2000 index gave up 1.7 percent to 1,372.54.
"A global stock market fund will have its fair share of value and growth companies, unlike -say- the FTSE 100 index which is predominately value-orientated with its bias towards energy, mining and financial, or the Japanese TOPIX which is growth-orientated with a predominance of consumer goods companies".
"While the U.S. President insists on ramping up the war of words, there is a decreasing chance of any diplomatic solution", Carnell said. Interestingly though, it soon after managed to more than make up for its losses relative to the Japanese and British currencies, while it recovered a significant portion of its losses versus the euro as well.
"I think this situation is more critical that the market is actually respecting".
Traders said hedge funds had cut leveraged bets against the franc, prompted in part by worries about increased US-North Korea tension. The euro zone's version is at its highest since April, when France's election was rattling the region.
Trump took specific aim at North Korean leader Kim Jong Un on Thursday, saying he had "disrespected our country greatly" and would not be "getting away with it".More news: Trump 'to call for China IP trade probe tomorrow'
-North Korea tension also weighed on the Canadian dollar, which weakened against its US counterpart, despite higher oil prices and stronger-than-expected domestic housing data.
In bond markets, the yield on US Treasuries fell, also pressured by the lowered expectations for a Fed move. "Hard to assess political risk is now intruding on this scenario".
The Korean won also continued to skid, down 0.45 percent to 1,147.2, falling below its 200-day moving average for the first time in a month. The contract fell 97 cents, or 2 percent, to close at $48.59 a barrel on Thursday.
Analysts said yields, which move inversely to prices, could fall further if the geopolitical tensions continue to rise - even if central bankers in the USA continue to talk of raising interest rates or scaling back stimulus programmes.
Benchmark 10-year notes last rose 5/32 in price to yield 2.2255 per cent, from 2.242 per cent late on Wednesday.More news: Markets extend losses as Korea tensions escalate
The dollar eased slightly against a basket of major currencies .DXY to 93.356.
The market's main backstop in times of strain, gold, hit a two-month high of $1,282 an ounce amid the nervousness. It is set for a weekly gain of 2.4 percent.
Brent crude was up 80 cents at $53.50 a barrel and U.S. crude was up 60 cents and back up to $50. They plunged 2 percent on Thursday on fears of slowing demand and lingering concerns over a global oversupply.
J.C. Penney slumped as much as 18.25 percent to a record low after the retailer reported a bigger-than-expected quarterly loss.
Amid the hot rhetoric, USA stocks sold off sharply on Thursday, with the S&P 500 falling more than 1 percent.More news: Korean shares end lower on foreign selling amid tensions over N. Korea
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