London's FTSE 100 dipped by about 90 points, or more than 1%, in morning trading on Friday, adding to a slump of more than 100 points the day before and taking it to its lowest level since May. In Australia, the S&P/ASX 200 was down 1.13%.
Japan markets are closed for the Mountain Day holiday.
"I will tell you this, 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", Trump said.
"When investors are optimistic to the extreme, it means that most of their money is already in the market and there's no more money coming in", Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Sarasota, Florida. It has been more than a year since the last 5% downdraft in stocks and more than 76 weeks since the stock market suffered a 10% loss.
If North Korea launches an attack that threatens the US, China should stay neutral, but if the US attacks first and tries to overthrow North Korea's government, China will stop them, a Chinese state-run newspaper has said. "There are four more (inflation) prints between now and the December FOMC meeting and we expect the Fed to remain data-dependent, if a touch more cautious", TD Securities said in a note. "Hopefully Kim Jong Un will find another path!"
US stock futures ESc1 were marginally softer on Friday.
Equity screens were also awash with red in Asia as investors fled to safe haven assets after US President Donald Trump doubled down on his North Korea rhetoric.
The dollar was further weighed on Friday by the soft US inflation data. "Hard to assess political risk is now intruding on this scenario". The dollar hit an eight-week low against the yen Thursday on U.S.
The Japanese yen last strengthened 0.03 per cent versus the greenback at 109.22 per dollar.
Japan is the world's biggest creditor country and there is an assumption that investors there will repatriate funds in a crisis. At this level, the benchmark is on track for its lowest close since late June, according to FactSet data.
Data storage company Seagate Technology (STX) posted a standout gain within the hardware sector, jumping by 2.4%.
The dollar eased slightly against a basket of major currencies .DXY to 93.356. Spot gold inched down 0.1 percent to $1,284.64 per ounce as of 0616 GMT, but was set for a weekly gain of over 2 percent.
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.
The RBNZ kept interest rates unchanged at a record low of 1.75 percent on Thursday.
Railroad stocks have shown a strong move to the upside on the day, driving the Dow Jones Railroads Index up by 1.3 percent.
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