South Korea's KOSPI fell 1.8 percent to an 11-1/2-week low, but its losses for the week are a relatively modest 3.2 percent.
But the yen added to an already-strong weekly rally of close to 1.5 percent, hitting its highest in nearly four months versus the dollar at 108.73 yen. "I do think we could see markets pull back between 1 and 5 percent". Trading was thinner than usual, with Japanese markets closed for a public holiday.
The North Korean state media, describing President Donald Trump's warning of "fire and fury" as a "load of nonsense" said they aim to develop a plan by mid-August to launch four missiles at the us territory of Guam.
Many world stock markets have hit record or multi-year highs in recent weeks, leaving them vulnerable to a sell-off, and the tensions have proved the trigger.
Market watchers said the demand for gold bars is expected to continue increasing for the time being, until the tension on the Korean Peninsula settles down.
"I'll tell you why, and they should be very nervous".
FIRE AND FURY: Keeping up his tough talk, Trump told reporters that North Korean leader Kim Jong Un's government should "get their act together" or face extraordinary trouble, and suggested his earlier threat to unleash "fire and fury" on North Korea was too mild.
On Thursday, the three major USA indexes logged their worst performances since mid-May (http://www.marketwatch.com/story/us-stocks-set-up-for-another-day-of-losses-as-north-korean-tensions-simmer-2017-08-10) in a session dogged by geopolitical concerns.
A Chinese state-run newspaper said on Friday that China should make clear that it will stay neutral if North Korea launches an attack that threatens the United States, but that if the USA attacks first and tries to overthrow North Korea's government, China will prevent it doing so. "Hard to assess political risk is now intruding on this scenario". Both hit more than one-month lows.
The pan-European FTSEurofirst 300 index lost 1.06 percent and MSCI's gauge of stocks across the globe shed 0.17 percent.
The yen tends to benefit during times of geopolitical or financial stress as Japan is the world's biggest creditor nation and there is an assumption investors there will repatriate funds should a crisis eventuate.
Weakness in U.S. Treasury yields may also be supporting the yen, some analysts said.
Earlier, the dollar slipped as low as 108.91 yen, its weakest level since June 14, when the greenback fell as low as 108.81 yen.
The dollar remained steady against a basket of six currencies.
Front month Comex gold for August delivery rose 0.84% to $1,283.70 per troy ounce on Thursday. The tech-heavy Nasdaq composite lost 2.1 percent to 6,216.87.
US crude (CLc1) was unchanged at $48.59 per barrel and Brent (LCOc1) was last at $51.84, down 1.63 percent on the day. It is on track for a weekly loss of 2 percent.