World markets cautious in face of geopolitical risks

LONDON: Global stock markets moved cautiously Wednesday as geopolitical risks continued to gnaw at investor sentiment following last week's US missile strike on Syria and soaring tensions on the Korean peninsula.

Dealers remain on edge over a brewing crisis following the attack that has damaged ties between the US and Russia over Moscow's backing for Syrian President Bashar al-Assad.

"Global bourses have fallen just below break-even as the investor trade-off between safe haven assets and riskier equities continues," said Henry Croft, Research Analyst at Accendo Markets.

Safe-haven investments gold and government bonds firmed, while stock markets wobbled.

Wall Street opened lower, London was flat in mid-afternoon in Europe, while Frankfurt and Paris held on to small gains after losses in some Asian markets.

US Secretary of State Rex Tillerson began talks with his Russian counterpart Sergei Lavrov in Moscow on Wednesday following a war of words between the two sides over the US strike that Washington said was in retaliation for a suspected Syrian chemical attack.

Risks are also rising on the Korean peninsula, with US President Donald Trump warning Washington was prepared to "solve the problem" of North Korea on its own if Pyongyang's sole major ally China refused to help rein in its neighbour's nuclear ambitions.

Chinese President Xi Jinping urged Trump to peacefully resolve mounting tensions as a US naval strike group headed towards the region, a show of force that prompted the North to declare it was "ready to react to any mode of war desired by the US".

In Asia, Tokyo stocks finished 1.0 percent lower and Shanghai nudged 0.4 percent lower.

But Hong Kong stocks reversed earlier losses, gaining 0.9 percent. Sydney added less than 0.1 percent, while Singapore and Seoul each gained 0.2 percent.

The yen climbed to five-month highs against the dollar.

- 'Risk aversion rising' -

"The reality is there is a sense of risk aversion rising in markets," said Greg McKenna, chief market strategist at CFD and FX provider, AxiTrader.

"The worry is the rhetoric is heating up between the US and North Korea," he said.

Oil prices rose further following last Friday's US strike in Syria, which raised speculation about the impact on exports from the crude-rich Middle East.

Reports that Saudi Arabia is pushing fellow OPEC members to extend an oil output cut agreement also underpinned oil prices.