Investors ducked for cover on Wednesday as a drumbeat of alarming geopolitical news sent the safe-haven yen and gold to a five-month high and yields on top-rated sovereign bonds to their lowest for the year so far.
The unease tarnished an otherwise brightening outlook for global economic growth and kept equities restrained.
Japan's Nikkei slid 1 per cent as a rising yen weighed on exporters' shares, while E-mini futures for the S&P 500 were a fraction softer.
MSCI's broadest index of Asia-Pacific shares outside Japan was near flat and futures pointed to a slightly firmer opening for the main European bourses.
Shanghai eased 0.4 per cent as China reported a slight slowdown in producer price inflation.
In contrast, gold climbed as far as $1,280.30 at one stage, its highest since November 10.
“A degree of uncertainty has found its way into previously seemingly bulletproof financial markets,” wrote analysts at ANZ.
“There is clearly some nervousness out there, with tensions around North Korea ratcheting higher and adding to an already heightened geopolitical environment. Global cyclical assets have not yet responded, but that can't last.”
Chinese President Xi Jinping on Wednesday stressed the need for a peaceful solution for the Korean peninsula on a call with US President Donald Trump.
North Korea has warned of a nuclear attack on the United States at any sign of aggression, as a US Navy strike group steamed toward the Korean peninsula - a force Trump described as an “armada". Japan's navy also plans joint drills with the US force, sources told Reuters.
Trump said in a Tweet that North Korea was “looking for trouble” and the US would “solve the problem” with or without China's help.
The bellicose language has dragged South Korean stocks and the won to four-week lows and caused jitters across Asia.
At the same time, US Secretary of State Rex Tillerson was in Moscow to denounce Russian support for Syria's Bashar al-Assad, raising the stakes in West Asia.
A joint news conference by Trump and NATO Secretary General Jens Stoltenberg was also likely to generate headlines.
A yen for yen
The yen, a favoured harbour in times of stress due to Japan's position as the world's largest creditor nation, climbed across the board.
The dollar huddled at 109.50 yen, having been as low as 109.35 at one stage. Dealers warned there was little in the way of chart support until the 200-day moving average at 108.72.
The euro sank to its lowest in five months at 115.91 yen and was on track for 12 straight sessions of losses, a record for the single currency. It was steadier on the dollar at $1.0610.
Political uncertainty in France added to the euro's woes as hard-left candidate Jean-Luc Melenchon surged in the polls ahead of the May Presidential election.
All this unease boosted bonds with yields on 10-year Treasuries boasting their lowest close of the year on Tuesday. Yields were last at 2.29 per cent and testing a hugely important barrier on the charts.
Wall Street's losses were relatively minor as investors wagered on an upbeat earnings season, which kicks off this week with a handful of banks.
The Dow eased 0.03 per cent, while the S&P 500 lost 0.14 per cent and the Nasdaq 0.24 per cent.
Analysts expect earnings for all S&P 500 companies to have risen 10 percent in the first quarter from a year ago, according to Thomson Reuters data.
Oil got an added lift from reports Saudi Arabia was lobbying OPEC and other producers to extend a production cut beyond the first half of 2017.
Global benchmark Brent edged up 9 cents to $56.32 a barrel, while US crude added 7 cents to $53.47. If sustained, this would be the longest stretch of gains since August 2016.