Investors flee to bonds and gold in the wake of US sabre-rattling

GEOPOLITICAL chestbeating between the US and North Korea sent investors scurrying out of equities in favour of safe-haven assets such as bonds and gold yesterday.

European blue-chip stock indices fell after waking up to US President Donald Trump’s promise of “fire and fury” against the rogue Asian state, the CAC 40 in France slipping most, 1.4pc, as the attack on soldiers on the edges of Paris weakened investor sentiment further.

A stagnant pound neither helped nor hindered the

FTSE 100, which avoided the worst of the sell-off on the Continent to close 44.67 points lower at 7498.06, a 0.6pc retreat, while the DAX in Germany fell 1.1pc.

Investors dumped riskier equities and poured money into safe havens with government bond yields falling, the price of gold rallying to a six-week high and the Swiss franc and Japanese yen enjoying strong gains.

Financial and healthcare stocks suffered most on the FTSE 100, pulled down by their large international exposure. HSBC slipped 5.3p to 764.2p while

Glaxosmithkline and Shire slid 25.5p to £15.09 and 92p to £39.45, respectively.

There were some winners from the escalating tensions, however, with defence specialist BAE Systems climbing 7p to 582.5p,

buoyed by the prospect of increased military spending across the pond, and gold producers Randgold

Resources and Fresnillo pushing up 200p to £73.80 and 72p to £15.44, respectively, as precious metal prices rose.

Elsewhere, Sky weakened 8p to 953.5p as doubts resurfaced over Rupert Murdoch and 21st Century Fox’s takeover plans for the broadcaster after Karen Bradley, the Culture Secretary, asked media watchdog Ofcom to look into the £11.7bn bid again. Crispin Odey, the hedge fund manager and Sky investor, meanwhile told Reuters he is considering withdrawing his support for the deal, noting that the £10.75 offer price now looks “quite cheap”.

Prudential slumped 44p to £18.42 amid speculation ahead of its interim results today that the pensions giant is on the verge of breaking apart into UK and Asian divisions.

On the FTSE 250, troubled gold producer

Acacia Mining surged 13.6p to 189.9p after broker RBC Capital Markets decided that its 67pc nosedive since the Tanzanian government introduced a ban on gold and copper concentrate exports had helped the stock roughly settle on a fair valuation. Upgrading it to “sector perform”, the broker argued that there were multiple outcomes that would be mutually beneficial for both parties.

Finally, Ladbrokes Coral dived 6.6p to 121.5p after its private equity backers sold off stakes in the bookie.