Stock 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.

Growing uncertainty ahead of a presidential election in France also kept investors on the sidelines.

"Ongoing geopolitical tensions across the globe and heightened political risk in Europe have limited appetite for riskier assets this week, with global stocks now on the back foot," said Lukman Otunuga, an analyst at FXTM.

As stock markets wobbled, safe-haven investments gold and government bonds firmed.

Wall Street posted small losses approaching midday in New York, while in Europe London stocks closed lower and Paris ended flat.

Frankfurt managed paper-thin gains.

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".

- '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 dropped after the US government reported a smaller-than-expected fall in crude inventories, and increased production levels.

That reversed an earlier firm trend seen on reports that Saudi Arabia is pushing fellow OPEC members to extend an oil output cut agreement beyond June.

New York - Dow: DOWN 0.4 percent at 20,568.97 points

London - FTSE 100: DOWN 0.2 percent at 7,348.99 (close)

Frankfurt - DAX 30: UP 0.1 percent at 12,154.70 (close)

Paris - CAC 40: FLAT at 5,101.11 (close)

EURO STOXX 50: FLAT at 3,468.51 (close)

Tokyo - Nikkei 225: DOWN 1.0 percent at 18,552.61 (close)

Hong Kong - Hang Seng: UP 0.9 percent at 24,313.5 (close)

Shanghai - Composite: DOWN 0.4 percent at 3,273.83 (close)

Euro/dollar: UP at $1.0619 from $1.0606 at 2100 GMT

Pound/dollar: UP at $1.2508 from $1.2494

Dollar/yen: DOWN at 109.47 yen from 109.64 yen

Oil - West Texas Intermediate: DOWN 12 cents at $53.28 per barrel

Oil - Brent North Sea: DOWN 19 cents at $56.04