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FTSE 100 Index drops as North Korea crisis continues

European markets shifted into reverse on Monday as North Korea's nuclear bomb test ratcheted up tensions with the United States and inspired another round of selling.

The FTSE 100 Index closed down 27.03 points to 7411.47, after Pyongyang detonated a hydrogen bomb underground on Sunday, sparking calls from UN Security Council members for further sanctions against the authoritarian nation.

US ambassador to the UN Nikki Haley said North Korea's relentless actions show that its leader Kim Jong Un is "begging for war", and the time has come for the council to adopt the strongest diplomatic measures.

Traders sought out safe haven stocks as the fall-out hit markets, with silver miner Fresnillo rising close to 3%, or 47p to 1,664p, and Randgold Resources lifted 160p to 8,070p.

The price of gold was 0.7% higher at 1,334 US dollars an ounce.

David Madden, market analyst at CMC Markets UK, said: "Equity markets in Europe are in the red today as tensions surrounding North Korea were heightened again on the back of the nuclear bomb test carried out by the regime over the weekend.

"Traders are clearly nervous, as stocks are lower, but the sell-off today hasn't been as bad a previous ones.

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"This suggests that dealers are getting somewhat used to the situation.

"Randgold Resources and Fresnillo are higher on the day as the underlying gold and silver markets are strong due to the risk-off strategy adopted by traders."

On the currency markets, the pound was weighed down by weak economic data from the UK construction sector.

Activity in Britain's construction industry unexpectedly slowed to a one-year low in August as new business slumped for the second month in a row.

The closely watched Markit/CIPS UK Construction purchasing managers' index (PMI) showed a reading of 51.1 last month, down from 51.9 in July with economists expecting 52.

A reading above 50 indicates growth.

Sterling was 0.1% lower against the US dollar at 1.293, and 0.6% off versus the euro at 1.085.

The outcome was also taking its toll on housebuilding stocks, with Taylor Wimpey and Barratt Developments slipping 3.4p to 198.3p and 10p to 617.5p respectively.

In oil, Brent crude sank 0.7% to 52.40 US dollars a barrel as commodity traders responded to North Korea's test launch by pulling back from crude.

Focusing on UK stocks, household goods giant Reckitt Benckiser said f our executives are to leave the firm as it looks to bounce back from sluggish sales and a recent cyber attack.

Chiefs at its information technology, human resources, developing markets and marketing departments have all resigned from Reckitt, which is also behind products such as Durex and Dettol.

It is thought the resignations are not linked and all have quit for separate reasons.

The quartet, Darrell Stein, Deborah Yates, Frederic Larmuseau and Roberto Funari, form part of a 10-member senior executive committee.

Shares closed down 85p to 7,290p.

The biggest risers on the FTSE 100 Index were Fresnillo up 47p to 1,664p, Next up 93p to 4,227p, Randgold Resources up 160p to 8,070p, DCC up 130p to 7,270p.

The biggest fallers were International Consolidated Airlines Group down 13.5p to 603.5p, Prudential down 34.5p to 1,788.5p, Provident Financial down 16p to 856p, Standard Life Aberdeen down 7.7p to 429.3p.