The greenback also came under pressure after New York Federal Reserve President William Dudley cautioned it would "take some time" for USA inflation to reach the bank's two percent target, the latest warning price pressures remain muted. "As long as it doesn't go beyond just a war of words, this is going to be short-lived".
JJ Kinahan, chief strategist at TD Ameritrade, said geopolitics had "splashed cold water on the markets".
In the first four days of the week, the Standard & Poor's 500 index swung from marking its latest record high to posting its biggest single-day drop in almost three months.
"There's not a great incentive to buy big", said Lerner of SunTrust Advisory.
The North Korea situation isn't the only thing weighing on stocks. At 2:19pm BST, the Comex September silver futures contract was up 2.06% or 35 cents to $17.21 an ounce, while spot platinum rose 0.80% or $7.81 to $983.26 an ounce.
The rupee fell further by 19 paise to 64.27 against the USA dollar due to strong demand for the American currency from importers amid foreign fund outflows.
Wall Street's fear gauge-the CBOE Volatility Index or the VIX-jumped 36 percent to 15.06.
Instead, investors headed for safe havens, such as gold, which gained as much as 1.2% - a near two-month high - in Wednesday trading.
"The yen is the big story really". "We believe continued saber-rattling ... could take gold prices higher still", Nitesh Shah, director at ETF Securities, told Reuters.
"If the data continues to come in on the softer side, the market might start to price the Fed staying on hold this year", said Sireen Harajli, FX strategist at Mizuho in NY.
Materials, home to gold producers and other resource-based companies, was the only gainer among the index's 10 main sectors and was up 0.6 percent. It was last up 1.2% at 1.1305 per euro.
CURRENCIES: The dollar slipped to 109.98 yen from 110.06 late Wednesday in Asia.
The market also awaited U.S. consumer inflation data on Friday that would offer more clues about the pace of the U.S. Federal Reserve's monetary tightening. The yield - or interest rate - on a benchmark 10-year US Treasury bill dropped to 2.24%, while a 10-year German bund was yielding 0.43%. It was on course for an over 5% weekly rise, the highest such gain since July 2016.
Ongoing global glut concerns lingered in oil markets despite a bigger-than-expected draw in USA crude inventories, leaving prices volatile. Brent crude, used to price worldwide oils, rose 20 cents to $52.10 a barrel in London.
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