By Carla Mozee, MarketWatch

U.K. stocks sagged Monday, falling alongside European and Asian stocks as tensions between the U.S. and North Korea came back in focus.

The FTSE 100 shed 0.2% to 7,313.37, with only the basic materials sector showing an advance. The index on Friday fell 0.9% (http://www.marketwatch.com/story/ftse-100-drops-as-travel-shares-rattled-after-terrorists-attacks-in-spain-2017-08-18), reducing its weekly advance to 0.2%.

European and most Asian stocks started the week in the red as a new cycle of escalation on the Korean Peninsula appeared set to rev up as U.S. and South Korea kicked off annual military exercises (http://www.marketwatch.com/story/tensions-expected-to-rise-as-us-south-korea-start-annual-war-games-2017-08-20). Pyongyang warned on Sunday that the upcoming exercises are "reckless behavior driving the situation into the uncontrollable phase of a nuclear war."

"North Korea tensions should remain elevated with the U.S. and South Korea holding joint military exercises from today to 31 August. North Korea condemns the joint exercises as a rehearsal for an invasion," said Sue Trinh, head of Asia FX strategy at RBC, in a note.

"We think volatility is more likely to pick up in and around the week beginning Sept. 4, coinciding with implementation of the latest sanctions and North Korea Foundation Day," she said.

Tensions between the U.S. and North Korea recently led investors to flee so-called risk assets and pick up haven assets including gold , bonds and the Swiss franc .

Mining shares managed to push higher even as a risk-off mood hung over the equity markets. Iron ore heavyweights BHP Billiton PLC (BLT.LN) (BHP.AU) (BHP.AU) and Rio Tinto PLC (RIO) (RIO) (RIO) were up by 1% and 1.3%, respectively. Earlier Monday, rival Australian iron ore producer Fortescue Metals Group Ltd. (FMG.AU) raised its dividend payout after annual profit more than doubled (http://www.marketwatch.com/story/fortescue-metals-profit-jumps-flags-dividend-rise-2017-08-21) on strong iron ore prices.

Metals prices were broadly higher, and shares of copper miner Antofagasta PLC (ANTO.LN) picked up 0.8% and Glencore PLC (GLEN.LN) moved up 0.6%.

Housing shares were mixed Monday after Rightmove said the average asking price for houses fell 0.9% in August. Persimmon PLC shares (PSN.LN) rose 0.8%, Barratt Developments (BDEV.LN) was off 0.1% an Taylor Wimpey PLC (TW.LN) gained 0.2%.

The pound bought $1.2859, lower than $1.2876 late Friday in New York.

 

(END) Dow Jones Newswires

August 21, 2017 04:33 ET (08:33 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.
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