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Asia: Shares, US stock futures, US dollar slip on rising Korean tensions

Wednesday, August 9, 2017 - 11:26

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[TOKYO] Asian shares and US stock futures slipped while US Treasuries, gold and the safe-haven yen rose in early Asian trading on Wednesday after tensions on the Korean peninsula escalated with Pyongyang's warning that it is "carefully examining" plans for a missile strike on the US Pacific territory of Guam.

Just hours after US President Donald Trump told North Korea that any threat to the United States would be met with "fire and fury," a spokesman for the Korean People's Army said in a statement carried by the North's state-run KCNA news agency that it was considering a strike aimed at US military bases on Guam.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.2 per cent in early trading, while Japan's Nikkei was 1.2 per cent lower as the stronger yen sapped investors' appetite.

South Korean shares were down 0.9 per cent and the won was 0.6 per cent lower at 1,134.10 at 0048 gmt.

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S&P 500 e-mini futures were down 0.2 per cent, while the dollar dipped 0.2 per cent against its perceived safe-haven Japanese counterpart to 110.12 yen.

The euro slid 0.3 per cent to 129.34 yen, and fell 0.1 per cent against the dollar to US$1.1743.

"It's a clear case of 'risk-off' sentiment lifting the yen, as investors focus on the latest developments with North Korea," said Kumiko Ishikawa, FX market analyst at Sony Financial Holdings in Tokyo.

Thin liquidity could also amplify market moves, she added, with markets in Singapore closed for the National Day public holiday, and many market participants in Japan taking time off this week ahead of a public holiday on Friday.

The dollar index, which tracks the greenback against a basket of six major rivals, was nearly flat on the day at 93.657, remaining above last week's 15-month low of 92.548.

The yield on the benchmark 10-year US Treasury note fell to 2.254 per cent from its US close of 2.282 per cent on Tuesday.

Spot gold added 0.2 per cent to US$1,262.35 an ounce, pulling away from the previous session's two-week lows.

US stocks closed lower on Tuesday after a late afternoon selling spree as investors fled for safety after Mr Trump's vow to respond aggressively to any North Korean threats.

Japan said on Tuesday it was possible that North Korea had already developed nuclear warheads and warned of an acute threat posed by its weapons programmes as Pyongyang's continues missile and nuclear tests in defiance of UN sanctions.

Crude oil prices extended their slide from Tuesday as exports from key Opec producers rose and despite news of lower crude shipments from Saudi Arabia.

US crude shed 12 US cents to US$49.05 a barrel, while Brent crude fell 18 US cents a barrel at US$51.96 a barrel.

REUTERS

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