LONDON MARKETS: U.K. Stocks Knocked Sharply Lower After North Korea Launches Missile Over Japan

By Carla Mozee, MarketWatch Features Dow Jones Newswires

"This outrageous action ... is an unprecedented, grave and serious threat," says Japan's Prime Minister Shinzo Abe

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U.K. stocks dropped sharply Tuesday, joining a selloff in European markets after North Korea launched a ballistic missile over Japan, reigniting tensions that sent investors seeking assets seen as less risky.

The FTSE 100 index fell 1.2% to 7,311.68, moving their lowest since Aug. 11, FactSet data showed. No sector moved higher. Trading in the U.K. was closed Monday for the August Bank Holiday.

Less than 10 components on the London benchmark rose, and those advancers were led by miners Randgold Resources Ltd. (RRS.LN) and Fresnillo PLC (FRES.LN) as gold shot above $1,300 an ounce to around an 11-month high.

The moves came after Pyongyang launched a missile ( early Tuesday that passed over the northern Japanese island of Hokkaido and landed in the Pacific Ocean. It was the first missile fired over the main lands of Japan since 2009.

"This has understandably seen an overnight preference for safe havens such as gold, the Swiss franc, Japanese yen and bonds, at the expense of equities," said Accendo Markets head of research Mike van Dulken, adding that the missile launch undermines attempts by the U.S. to negotiate with North Korea's leader Kim Jong-un.

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"Beware the impact of additional [U.S. dollar] weakness (2.5 year lows), which could weigh on both the U.K. FTSE and German DAX by way of a stronger [pound] and [euro]," he said.

The pound bought $1.2954, compared with $1.2933 late Monday in New York. A stronger pound can hurt shares of multinational companies as they make the bulk of their sales and earnings overseas. Shares of drug maker GlaxoSmithKline PLC (GSK.LN) fell 1.8% and British American Tobacco PLC (BATS.LN) gave up 1.6%.

The euro , meanwhile, rose above $1.20 for the first time since January 2015. The Stoxx Europe 600 slid more than 1% to a six-month low.

Economic data: U.K. house prices fell 0.1% on the month in August (, following a modest increase the previous month, according to Nationwide figures released Tuesday.

(END) Dow Jones Newswires

August 29, 2017 04:13 ET (08:13 GMT)