STOCK markets have plunged after North Korea fired a missile over Japan, with the FTSE 100 crashing more than one per cent, amid rising fears of world nuclear war.
Panicked investors sold out of stocks and shares and rushed to put money into safe havens, such as gold, amid the latest provocative move by Kim Jong-un.
Britain's FTSE 100 sank to 7,314, while Germany's DAX and France's CAC 40 also fell by more than one per cent, after worries hit Asian markets and America's Dow Jones overnight.
Japan's prime minister Shinzo Abe said North Korea is now an "unprecedented" threat to his country.
The world is now waiting for Mr Trump to react to the latest move from the rogue state.
It comes after US and Japanese forces finished a joint drill in the region.
Tensions between North Korea and the US have jumped in recent weeks, with a war of words breaking out between Pyongyang and President Donald Trump.
But experts said the situation has now become more serious, prompting traders to run for cover.
Gold prices jumped above $1,300 for the first time in almost 10 months.
David Madden, market analyst at CMC Markets UK, said: "The situation surrounding North Korea has become more serious now, and we are seeing a risk-off strategy being adopted by traders.
"There was a knee-jerk reaction to the missile being launched, but after a while traders nerves settled, and we saw a bounce back in equity markets – which are off the lows of the session.
"The Japanese Prime Minister, Shinzo Abe, and Donald Trump vowed to ramp-up pressure on North Koreas in light of the missile being fired.
"Gold hit a new nine month high on the back of the missile being fired by North Korea.
"The metal spend a lot of time in 2017 being trapped in a range between the low $1200’s and just shy of $1300, and now that is has made a clear break beyond the range we could see further gains.
"North Korea tensions are also putting pressure on the US dollar, as the currency continues to suffer in the aftermath of Janet Yellen's speech at Jackson Hole last week.
The US Fed chair appeared cautious in her update, which led traders to think that the central bank may now raised interest rates again this year.
Hussein Sayed, chief market strategist at FXTM, said: "Equities across the globe traded mostly in the red on Tuesday, after North Korea launched a ballistic missile over Japan.
"Although investors have become sensitised to such actions by Kim’s regime, firing missiles over Japan is a rare occurrence and the message appears to be that North Korea is ready to escalate tensions.
"Gold seems to have benefited from the tensions, currently trading at a nine-month high.
"However, most of the gains in the precious metal occurred before the missile launch, meaning that there are different factors supporting prices.
"U.S. 10-year Treasury bond yields have been falling since 10 July, with total declines of 10.8 per cent.
"This partially explains gold’s 8.6 per cent surge since then, and investors are still not buying Trump’s tax reforms."
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Livio S. Nespoli has been a broker, registered investment advisor, and financial publisher since 1985.