The FTSE 100 has extended its slump after US president Donald Trump ramped up rhetoric against North Korea, saying his earlier threat to unleash 'fire and fury' on the country 'wasn't tough enough'.
'If anything, maybe that statement wasn't tough enough,' he told reporters yesterday, saying that North Korea 'better get their act together or they're going to be in trouble like few nations ever have been in trouble in this world.'
That sparked a renewed sell-off on the FTSE 100, which fell 85 points, or 1.2%, to 7,304, and is now down 3.1% over the last three days in which the US standoff with North Korea has gripped investors.
Even US investors have lost their calm, with the S&P 500 falling 1.5% yesterday, ending a 15-day streak of closing with a move of less than 0.3%, a 90-year record.
That fall was its biggest since mid-May, while the Vix, a gauge of volatility known as the 'fear index', spiked to its highest level of the year. The grim mood also spread to eurozone markets, with the French CAC 40 falling 0.9%.
'The enormous surge in the Vix tells us exactly what traders are thinking,' said David Madden, market analyst at CMC Markets UK.
'The tension between the US and North Korea is still dominating the news and it is looming over the financial markets. Global equity markets have been severely shaken by the standoff between the two countries.'
On the FTSE 100, miners slumped to the bottom of the index for a second successive day. Fallers included: