S&P falls 1.4 percent in safety flight on North Korea tensions

S&P falls 1.4 percent in safety flight on North Korea tensions

NEW YORK, Aug 11 (Reuters) - Wall Street put a floor under global equities on Friday after a weak inflation reading brought investors back into US technology and other stocks, but gold and the yen still added slightly to the week's gains as tensions continued to escalate between North Korea and the United States.

A day earlier, the Standard & Poor's 500 index posted its biggest single-day drop in almost three months following Trump's warning to unleash "fire and fury" if Pyongyang continued its nuclear weapons expansion.

The dollar index, which measures the U.S. currency against a basket of major peers, slipped 0.1 percent as U.S. Treasury yields fell.

The dollar carried over its weakness from overnight trading overseas, where dollar selling gathered steam following a news report citing US intelligence officials as saying that North Korea has succeeded in making a nuclear warhead that is small enough to be mounted on its missiles. Hong Kong's Hang Seng Index plummeted 560.49 points or 2% to 26,883.51. Sydney's S&P-ASX 200 gained 0.5 percent to 5,773.70 while New Zealand also rose.

The ongoing political crisis that has seen North Korea state it was seeking to strike the US Pacific island territory of Guam within days, prompted gold speculator Dennis Gartman, editor and publisher of The Gartman Letter to say he believed gold was on the cusp on a significant break out.

"There's not a fundamental reason why what we're seeing out of North Korea right now should affect stock market prices, but it's being used as the reason to sell off right now because we've been looking for it for so long", Schiegoleit said.

Mr Trump warned Kim Jong Un earlier this week that his country faced "fire and fury".

The strength on Wall Street was partly due to bargain hunting, with traders picking up stocks at reduced levels following the pullback seen over the past few sessions.

"Japanese equities hadn't been rising much despite positive earnings results, so investors had started jumping at shadows, doubting whether they should really be holdings onto Japanese stocks". The market slide accelerated slightly in the last half-hour of trading as Trump denounced North Korea's nuclear program.

The Standard & Poor's 500 index rose 0.1% to 2,482 as of 1:45 p.m.

Japanese markets were closed for a holiday but the in-demand yen powered on, hitting an eight-week high of 108.91 yen to the dollar, adding to its biggest weekly gain since May. This is surely welcome news after 2016 was the first year in which overall productivity in the USA dropped since 1982. The euro fetched $1.1744 compared with $1.1752 late Wednesday in NY.

ENERGY: Benchmark U.S. crude added 1 cent to $49.18 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, used to price worldwide oils, slid 80 cents, or 1.5 percent, to $51.90.