USA stocks were modestly higher in late morning trading on Friday as investors cautiously dipped back into riskier assets, after a three-day losing streak on concerns over escalating tensions between the United States and North Korea.
They suggest the USA and China, a North Korean ally, could work together to de-escalate the situation.
Economic data showed USA producer prices unexpectedly fell in July, recording their biggest drop in almost a year, while separate figures showed the number of Americans filing for unemployment benefits unexpectedly rose last week. The Shanghai Composite slipped 1.1 percent to 3,240.69. "The UK FTSE has broken lower following a disappointing trio of mixed UK industrial/manufacturing production, another construction output decline and a wider trade deficit".
In his latest warning to North Korea, U.S. President Donald Trump said on Friday military solutions were "fully in place" and referred to American weapons as being "locked and loaded" should the nuclear-armed nation act "unwisely".
Developments regarding the situation with North Korea may remain in focus next week, although traders are also likely to keep an eye on reports on retail sales, housing starts, and industrial production.
Meanwhile, investors moved money into assets seen as safe havens. Gold gained 0.54 percent to $1,266 an ounce, but that is only its highest in less than a week.
Markets had earlier stabilised as US Secretary of State Rex Tillerson had tried to ease the tensions, saying he did not believe there is "any imminent threat" to Guam and that diplomacy would prevail.
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The market slide accelerated slightly in the last half-hour of trading as Trump denounced North Korea's nuclear program.
The market was waiting for USA consumer inflation data on Friday that would offer more clues about future Fed decisions.
"Heightened geopolitical risks overnight have seen the markets flip from risk-on to risk-off and we have to wait and see how long this move runs before adding some positions", said Viraj Patel, an FX strategist at ING in London.
The greenback also came under pressure after New York Federal Reserve President William Dudley cautioned it would "take some time" for United States inflation to reach the bank's two percent target. He was not sure about another interest-rate rise this year. Most observers believe the next hike will come in December.
In Asia, benchmarks in Hong Kong and South Korea-which had been one of the best performers of 2017-closed down 2% and 1.7% respectively, Friday, putting the week's drop at 2.5% and 3.2%.
The Swiss franc on Wednesday held near the day's highs after posting its biggest single-day rise against the euro since the central bank removed its cap on the currency in January 2015.