Global stocks dip, yen gains after North Korea test

Stocks and the dollar fell on Monday while the yen, gold and sovereign bonds rose after North Korea’s most powerful nuclear test to date dampened investor appetite for risk.

Sunday's test, and reports from Seoul that Pyongyang was making preparations for another missile launch, sparked warnings from Washington and drove South Korea's stock market .KS11 1.2 percent lower. Japan's Nikkei lost almost 1 percent.

With Wall Street closed for the Labor Day holiday at the start of a week likely to become increasingly dominated by a number of central bank meetings, the pan-European STOXX 600 index fell nearly half a percent.

The dollar, down 0.3 percent against the basket of currencies used to measure its broader strength, fell 0.5 percent to 109.72 yen JPY=, having been as low as 109.22 and off a whole yen from late on Friday.

Investors tend to buy the yen in time of political or market tension on expectations Japanese investors will over time repatriate their money.

The Swiss franc CHF=, also viewed as a safe place to park money, rose 0.7 percent to 0.9579 per dollar.

Driven by the Korean losses, MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS slipped 0.7 percent.

Yields on German government bonds, regarded as among the world’s lowest-risk assets, fell slightly. Benchmark 10-year yields DE10YT=TWEB were down 1 basis point at 0.37 percent while two-year yields DE2YT=TWEB dipped a similar amount to minus 0.76 percent, their lowest since April.

Safe-haven gold XAU= was up 0.8 percent at $1,336 an ounce, having risen to $1,339.47, its highest in nearly a year.