North Korea tensions send markets into the red
European markets sunk into the red on Tuesday after North Korea ratcheted up tensions with the United States by firing a ballistic missile over Japan.
The FTSE 100 Index closed down 64.03 points to 7,337.43, after the rocket plunged into waters off the northern Pacific Ocean in a sign of defiance from Pyongyang to the war games being conducted by Washington and South Korea.
Germany's Xetra Dax dropped 1.5% and the Cac 40 in France fell 1%, as analysts speculated whether North Korea was testing a new intermediate-range missile that it threatened to fire towards the US territory of Guam.
David Madden, analyst of CMC Markets UK, said: " European equity markets sold off heavily after North Korea launched a missile over Japan last night, and that rattled investor's already weary nerves.
"The stand-off between the US and North Korea never went away, and as of last night it is back in the forefront of traders' minds.
"Tensions have shifted up a gear, and dealers are dumping stocks as they don't want to remain long while the political situation plays out."
On the currency markets, the pound was experiencing a mixed session, slipping 0.3% against the euro to 1.07, but rising 0.1% versus the US dollar to 1.29.
The greenback was down against a host of major currencies, helping the euro reach an 18-month high and break through the psychologically important 1.20 US dollar mark.
The fall was driven by anxiety over North Korea coupled with concerns about a potential hit to the US economy from tropical storm Harvey.
Traders were also pencilling in the prospect of US Federal Reserve holding back from hiking interest rates this year.
The oil price also responded to the severe weather hammering Houston, Texas, as production was hampered by a number of refineries going offline.
However, gains at the beginning of the session eased back by the time the FTSE 100 closed, with Brent crude dropping 0.6% to 51.59 US dollars a barrel.
In UK stocks, precious metal miners were among the biggest risers as investors sought out safe havens.
Silver miner Fresnillo rose 2.5%, or 41p to 1,621p, while Randgold Resources climbed 4.5% or 345p to 7,915p.
Outsourcing firm Bunzl was also down despite profits rising sharply in the first half of the year as it reaped the rewards of growth in the US.
Shares were off 49p to 2,283p as the group posted a 20% rise in revenue to £4.1 billion and pre-tax profit increased 17% to £181.9 million in the six months to June 30.
Bunzl has been buoyed by a string of acquisitions in North America, where it books the vast majority of its revenue, and the Brexit-induced collapse in sterling.
The biggest risers on the FTSE 100 Index were Randgold Resources up 345p to 7,915p, Fresnillo up 41p to 1,621p, Anglo American up 14p to 1,353.5p, Associated British Foods up 32p to 3,216p.
The biggest fallers were ITV down 7.9p to 153p, Morrison's down 9.3p to 242.1p, Smurfit Kappa down 69p to 2,280p, CRH down 73p to 2,647p.