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 per cent and Germany's Dax tumbling by 1.1 per cent.
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 one per cent to $1,274.39 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 per cent versus the euro at 1.11.
The price of oil was also 0.3 per cent ahead at $52.29 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 £22.2bn.
The deal, which comes after a second extension to the talk deadlines on Tuesday, will see Vantiv pay 397p a share for Worldpay, or £8bn, plus £1.3bn to cover debts.
Shares rose more than 1.3 per cent 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 per cent rise in pre-tax profits to £237 million in the six months to June 30, while revenue rose 12.5 per cent to £3.97bn.
Analysts put the share price fall down to slowing growth in the second quarter, with shares slipping more than seven per cent 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.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here