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London — World stocks tumbled for a fourth day last Friday and were on course for their worst week since November, as the escalating war of words over North Korea drove investors towards the yen, the Swiss franc and gold.

Europe’s main London, Frankfurt and Paris markets started between 0,5 percent and 1,1 percent lower, and Germany’s ultra-safe 10-year government bonds were trading at their highest prices since June.

US President Donald Trump issued a new verbal warning to Pyongyang on Thursday, saying his previous promise to unleash “fire and fury” may not have been strong enough after North Korea responded with a threat to land a missile near the US Pacific territory of Guam.

Japanese markets were closed for a holiday but the in-demand yen powered on, hitting an eight-week high of ¥108,91 to the dollar, adding to its biggest weekly gain since May.

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 there will repatriate funds should a crisis materialise. The Swiss franc, the other traditional currency safety-play, has benefited too. Two weeks ago it saw its biggest weakly fall against the euro since the start of 2015. This week has been its biggest rise since June 2016.

“Geopolitical tensions are the main focus: the S&P 500 was down 1,5 percent last night and many investors are becoming risk averse,” said DZ Bank strategist Andy Cossor.

Many world stock markets have hit record or multi-year highs in recent weeks, leaving them vulnerable to a sell-off, and the tensions over North Korea have proved the trigger.

The CBOE volatility index, the most widely followed barometer of expected near-term US stock market volatility, hit its highest mark since November 8, when Trump was elected president.

The Chinese volatility gauge jumped by the most since January 2016 to its highest level in more than seven months. The eurozone’s version is the highest since April, when France’s election was rattling the region.

Overnight, MSCI’s broadest index of Asia-Pacific shares outside Japan had skidded 1,55 percent, its biggest one-day loss since mid-December, to leave it down 2,5 percent for the week.

“What has changed this time is that the scary threats and war of words between the US and North Korea have intensified to the point that markets can’t ignore it,” said Shane Oliver, head of investment strategy at AMP Capital in Sydney.

“Of course, it’s all come at a time when share markets are due for a correction, so North Korea has provided a perfect trigger.”

New Cuban crisis?

South Korea’s KOSPI fell 1,8 percent to a low of nearly 12 weeks, but its losses for the week are a relatively modest 3,2 percent.

“Pretty remarkable, perhaps even extraordinary, considering,” said Tim Ash, a strategist at fund manager BlueBay. The Korean won also continued to skid, down 0,45 percent to 1 147,20/$, falling below its 200-day moving average for the first time in a month.

Australian shares were down 1,3 percent, for a weekly loss of 0,6 percent, and Chinese and Hong Kong blue chips lost 1,6 percent and 1,9 percent respectively.

A Chinese state-run newspaper said on Friday that China should make clear that it will stay neutral if North Korea launches an attack that threatens the United States, but that if the US attacks first and tries to overthrow North Korea’s government, China will prevent it doing so.

“This situation is beginning to develop into this generation’s Cuban Missile crisis moment,” ING’s chief Asia economist Robert Carnell wrote in a note.

The market’s backstop safety asset, gold, edged up to its latest two-month high of $1 288 an ounce. It soared more than 2 percent in the previous two sessions, and is set for a weekly gain of 2,25 percent.

Crude futures extended losses on fear of slowing demand and lingering concern over a global oversupply.

US crude was down 0,9 percent at $48,16 a barrel, on track for a weekly loss of 2,9 percent. Global benchmark Brent also fell 0,9 percent, to $51,44, after Thursday’s 1,5 percent drop. It is poised to end the week down 1,9 percent.

The industrial bellwether metal copper was set for its first weekly drop in five weeks — Reuters.