Update: Markets have been rattled by escalating tensions between the US and North Korea, after Pyongyang said it was considering a missile strike on the US Pacific territory of Guam.
The threat, reported by he state-run KCNA news agency, came just hours after US president Donald Trump warned any threat to the US would be met with 'fire and fury'.
US markets opened lower, prolonging a sell-off sparked yesterday on Trump's rhetoric. The Dow Jones opened 0.3% lower while the S&P 500 was down 0.2%.
European markets endured a heavier sell-off, having had no chance to react to Trump's comments yesterday, which came after the close of markets.
The German DAX 30 was down 1.1% while the French CAC 40 fell 1.5%, although losses weren't as steep for the FTSE 100, down 42 points, or 0.6%, at 7,500. The Vix, a measure of volatility known as the 'fear index', meanwhile spiked.
Michael Hewson, chief market analyst at CMC Markets UK, said investors were adopting a 'safety first' approach to the news.
'Rising tensions on the Korean peninsula are nothing new, they have been a staple for investors for several years now, but this flare-up had the potential for a policy misstep, more so because of the inexperience of the person occupying the White House, and a tendency to conduct policy by way of tweet and press conference,' he said.
'Equity markets have behaved as you would expect by selling off sharply, an entirely predictable outcome at any time but more so when volatility levels are as low as they are, which now suggests that these moves lower have the potential to gather pace until the rhetoric gets dialled back.'
Fawad Razaqzada, analyst at Forex.com, said the lack of market volatility leading up to the standoff had heightened fears of a bigger sell-off.
'The scary thing as far as buyers are concerned is that so far we haven't really experienced a typical summer correction in the stock markets, especially on Wall Street,' he said. 'But after yesterday's sharp [US] sell-off, a number of global stock indices are now flashing warning signs.'
Flight to safety
Investors sought safe havens, with the gold price jumping 0.9% to $1,271.98 an ounce while in the currency markets, the Swiss franc rallied. Yields on 10-year German bunds reached their lowest level since the end of June, at 0.427%.
Ned Naylor Leyland, manager of the Old Mutual Gold & Silver fund, said the tensions could provide a further catalyst to the price of precious metals.
'While the two monetary metals continue to trade mostly on real yield dynamics, some investors reacted to the escalating tension by buying these traditional safe haven instruments,' he said.
'Should the North Korea situation develop it may just prove to be the catalyst to push the institutional [investor] world to commit flows back to this asset class on a sustained basis.'
Amid the flight to safety, precious metals miners Fresnillo (FRES) and Randgold Resources (RRS) jumped to the top of the index, up 5% at £15.45 and 2.7% higher at £73.75 respectively. Defence group BAE Systems (BAES) was also among the risers, up 1.3% at 583p.
G4S (GFS) was the biggest faller on the index, down 7.4% at 306.3p despite reporting a 7.6% jump in profits, as investors focused on slowing organic revenue growth at the outsourcing group.