Jitters over a fresh exchange of barbs between North Korea and the United States drove up US Treasury prices and the yen yesterday while they damped sentiment in the US stock market.

MSCI’s world equity index, which tracks shares in 46 countries, was little changed, and Britain’s main FTSE 100 stock index climbed as Prime Minister Theresa May laid out plans for Britain’s exit from the EU.

North Korea said it might test a hydrogen bomb over the Pacific Ocean, in response to US President Donald Trump’s recent threat to destroy the reclusive country in a United Nations address. The aversion to risk drove investors into assets considered safer during times of geopolitical turmoil, like the Japanese yen and Treasuries.

The US dollar had scaled a two-month peak of 112.71 against the yen on Thursday, boosted by the US Federal Reserve signalling this week that it was still on track to raise interest rates by theend of the year, and after the Bank of Japan maintained its bond-buying pledge.

Sterling slipped after Ms May’s speech, but then recovered.

Ms May called for Britain to stay in the European Union’s single market during a roughly two-year transition out of the EU.

The Japanese yen strengthened 0.42 per cent versus the greenback at 112.02 per dollar, while sterling was last trading at $1.3514, down 0.47 per cent on the day.

US Treasury prices gained on concerns about conflict with North Korea. Benchmark 10-year notes last rose 6/32 in price to yield 2.2587 per cent, from 2.278 per cent late on Thursday.

The US Treasury yield curve flattened to its lowest levels since late 2007 overnight, before retracing in the US session.

The Dow Jones Industrial Average fell 25.74 points, or 0.12 per cent, to 22,333.49, the S&P 500 lost 1.32 points, or 0.05 per cent, to 2,499.28 and the Nasdaq Composite dropped 5.38 points, or 0.08 per cent, to 6,417.31.

MSCI’s gauge of stocks across the globe gained just 0.05 per cent.

Britain’s FTSE 100 was up 0.6 per cent, while the pan-European FTSEurofirst 300 index rose 0.05 per cent.

Oil prices were steady as investors waited to see whether major producers meeting in Vienna would back an extension to output cuts beyond March next year.

US crude rose 0.16 per cent to $50.63 per barrel and Brent was last at $56.31, up 0.39 per cent on the day.