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Asia: Stocks tumble, yen gains after North Korea fires missile over Japan
[TOKYO] US stock futures and Asian share markets tumbled on Tuesday, while the yen jumped to four-month highs against the dollar after North Korea fired a missile over northern Japan, setting up a tense start to trading for markets in the region.
S&P mini futures fell as much as 0.85 per cent on the news before paring losses to trade 0.5 per cent below its close on Monday, when it was little changed.
Japan's Nikkei fell 0.7 per cent to four-month low while South Korea's Kospi shed 0.5 per cent, helping to drag down MSCI's broadest index of Asia-Pacific shares outside Japan 0.3 per cent.
North Korea fired a missile early on Tuesday that flew over Japan and landed in the Pacific waters off the northern region of Hokkaido, South Korea and Japan said, in a sharp escalation of tensions on the Korean peninsula.
North Korea has conducted dozens of ballistic missile tests under young leader Kim Jong-Un, the most recent on Saturday, but firing projectiles over mainland Japan is rare.
"North Korea's reckless action is an unprecedented, serious and a grave threat to our nation," Japanese Prime Minister Shinzo Abe told reporters.
Earlier this month, North Korea threatened to fire missiles into the sea near the US Pacific territory of Guam after US President Donald Trump warned Pyongyang would face "fire and fury" if it threatened the United States.
The war of words between Mr Trump and Pyongyang caused global alarm and rocked financial markets.
"The missile flew across Japan this time, so the implications will likely be a bit different from previous ones," said Hirokazu Kabeya, chief global strategist at Daiwa Securities.
The yen rose 0.8 per cent to 108.33 to the dollar, its highest since April, despite Japan's proximity to North Korea.
The yen tends to benefit during times of geopolitical or financial stress as Japan is the world's biggest creditor nation and there is an assumption that Japanese investors will repatriate funds should a crisis materialize.
The safe-haven Swiss franc also advanced 0.5 per cent to 0.9510 franc on the dollar, its highest level in about a month and rose 0.6 per cent to 1.1385 per euro.
Gold also jumped 0.9 per cent to US$1,324 per ounce, hitting its highest level since Nov 9.
Investors also rushed to the safety of US Treasuries, pushing down the 10-year yield to a two-month low of 2.124 per cent.