Escalating tensions around Pyongyang's nuclear ambitions sent a shiver through markets worldwide and pushed the dollar to below 109.7 yen in afternoon forex trade to an eight-week low against the safe haven currency, piling more pressure on Japanese stocks.
Global stock markets ended their worst week in months amid rising tensions between the US and North Korea, though USA stock indexes steadied on Friday to close up slightly.
"The data confirms the Fed will have a wait-and-see attitude", said King Lip, chief investment officer at Baker Avenue Asset Management in San Francisco.
After President Trump warned North Korea about dire consequences, the powers in Pyongyang were quick to respond back.
Until this week, the equity market had managed to shake off negative news, including previous saber-rattling over North Korea and failures in Washington to pass high-profile bills, such as repealing and replacing Obamacare.
In Europe, equities dived with London losing 0.6 percent, while Frankfurt shed 1.1 percent and Paris fell 1.4 percent. Kohl's fell 5.8 percent. It has fallen more than 1 percent on only three days this year.
But the S&P Bank sub-sector fell 0.7 percent on dimming prospects of another rate hike this year since higher rates tend to boost bank profits.
"Pretty remarkable, perhaps even extraordinary, considering", said Tim Ash, strategist at fund manager BlueBay.
Amid the hot rhetoric, USA stocks sold off sharply on Thursday, with the S&P 500 falling more than 1 percent.
Disney dropped 3.9 percent, its biggest single-day loss in more than a year.
US President Donald Trump's warning to North Korea has given gold momentum; investors are also awaiting US inflation data.
"Today we announced a strategic shift in the way we distribute our content", Robert Iger, Walt Disney's chief executive officer, said in a statement.
The Labor Department said its consumer price index inched up by 0.1 percent in July after coming in unchanged in June.
USA crude rose 0.69 per cent to US$49.51 per barrel and Brent was last at US$52.66, up 1 per cent on the day.
Aside from geopolitical concerns, gold-focused investors are awaiting U.S. inflation data set to be released on Friday (August 8). As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2 basis points at 2.192 percent.
Gold was up USD3 at USD1293 an ounce, adding to 2-month highs.
Spot gold added 1.2 per cent to US$1,275.60 an ounce.
Ongoing global glut concerns lingered in oil markets despite a bigger-than-expected draw in USA crude inventories, leaving prices volatile.
More than 430 stocks from all USA exchanges hit their lowest levels in 52 weeks or more on Thursday, the most for any session since mid-November right after Trump was elected.