Markets decline as geopolitical tensions rise

On Monday stocks fell and gold and the yen climbed as geopolitical tensions flared up again, with U.S. President Donald Trump weighing new economic sanctions that could target China after a nuclear test Sunday by North Korea.

The Stoxx Europe 600 Index declined, with all industry sectors in the red, after a report that Pyongyang is preparing to launch an intercontinental ballistic missile heightened investors’ unease. S&P index futures also fell, while most European government bonds advanced and the yen and Swiss franc led currency gains. The euro strengthened even as economists expect European Central Bank President Mario Draghi to express concern Thursday about the currency’s rise. Industrial metals including copper and nickel extended a rally.

The White House warned any nation doing business with Kim Jong Un’s regime would be met with economic sanctions and trade embargoes, and his defense chief said the U.S. has “many military options.” North Korea said Sunday it successfully tested a hydrogen bomb with “unprecedentedly big power.” The test, the first since Trump took office, is a new hurdle for markets that have proven resilient to recent bouts of tension on the Korean peninsula.

The Stoxx Europe 600 Index sank 0.4 percent as of 11:58 a.m. in London. The U.K.’s FTSE 100 Index decreased 0.2 percent. Germany’s DAX Index fell 0.3 percent. The MSCI AllCountry World Index sank 0.2 percent, the largest dip in more than two weeks. Futures on the S&P 500 Index declined 0.3 percent.

Japan’s Topix index ended 1 percent lower, while South Korea’s Kospi index lost 1.2 percent and the S&P/ASX 200 Index in Sydney declined 0.4 percent. The Hang Seng Index in Hong Kong fell 1 percent. Indexes rose in China. The MSCI Asia Pacific Index fell 0.6 percent, poised for its worst decline since the 11 August.