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US President's North Korea comments batters blue-chip stocks


Donald Trump's stand-off with North Korea is having a bearing on the markets

Donald Trump's stand-off with North Korea is having a bearing on the markets

Donald Trump's stand-off with North Korea is having a bearing on the markets

Mounting tensions between the United States and North Korea battered blue-chip stocks on Wednesday, knocking the London market's attempts of securing a record high.

The FTSE 100 Index closed down 44.67 points at 7,498.06 after US President Donald Trump told North Korea he would unleash "fire and fury like the world has never seen" following suggestions the communist state can now strike America with a nuclear missile.

Pyongyang responded by saying it was studying plans for an attack on Guam, a US territory and home to Andersen US Air Force Base.

The heightened rhetoric dragged London's top flight back from 7,542.73 on Tuesday, when it came within a whisker of reaching the all-time closing high of 7547.63 recorded on May 26 and June 2.

European markets were also struggling amid the simmering political stand-off, with the Cac 40 in France dropping 1.4% and Germany's Dax tumbling by 1.1%.

Precious metals miners were among a smattering of UK stocks enjoying a stronger session as investors set course for safe havens.

The price of gold rose 1% to 1,274.39 US dollars per ounce, with Fresnillo and Randgold Resources up 72p to 1,544p and 200p to 7,380p respectively.

David Madden, market analyst at CMC Markets UK, said: "European stocks have suffered greatly today as traders were prompted to cut-and-run due to the escalating tensions between the US and North Korea.

"The stand-off between the two countries has encouraged dealers to dump stocks and seek safe haven investments like gold.

"While the two nations are at loggerheads, it is going to be difficult to imagine money flowing into stocks."

On the currency markets, the pound was marginally higher against the US dollar at 1.30 and up 0.1% versus the euro at 1.11.

The price of oil was also 0.3% ahead at 52.29 US dollars a barrel, with stockpiles coming under pressure from falling crude oil imports and record processing at American refineries.

In UK stocks, Worldpay Group was among the biggest risers after the firm agreed a £9.3 billion merger deal with US rival Vantiv in a tie-up that will create a global payments processing giant with a combined value of £22.2 billion.

The deal, which comes after a second extension to the talk deadlines on Tuesday, will see Vantiv pay 397p a share for Worldpay, or £8 billion, plus £1.3 billion to cover debts.

Shares rose more than 1.3% or 4.9p to 388.5p.

Global security giant G4S was enduring a torrid time despite reporting rising half-year sales and profits, as the firm's turnaround under chief executive Ashley Almanza continues to pick up pace.

The group reported a 16.7% rise in pre-tax profits to £237 million in the six months to June 30, while revenue rose 12.5% to £3.97 billion.

Analysts put the share price fall down to slowing growth in the second quarter, with shares slipping more than 7% or 24.7p to 305.9p.

The biggest risers on the FTSE 100 Index were Fresnillo up 72p to 1,544p, Randgold Resources up 200p to 7,380p, WorldPay Group up 4.9p to 388.5p, BAE Systems up 7p to 582.5p.

The biggest fallers were G4S down 24.7p to 305.9p, Standard Chartered down 20.9p to 783.1p, Prudential down 44p to 1,841.5p, Shire down 92p to 3,945p.