The Tokyo markets will be closed on Friday for a national holiday and will reopen Monday.
Many markets have recently climbed to record or multiyear highs, leaving them vulnerable to a sell-off.
North Korea responded with threats to launch missiles into the Pacific Ocean near Guam, a US territory. Netflix also fell, giving up $2.58, or 1.4 percent, to $175.78.
The Dow Jones US Defense Index increased +1.61% in trading today, over one year the index has gained 23% compared to Dow Jones Industrial Average of 18.97%. "Of course, it's all come at a time when share markets are due for a correction, so North Korea has provided a flawless trigger."NEW CUBAN CRISIS?South Korea's KOSPI .ks11 fell 1.8 percent to an 11-1/2-week low, but its losses for the week are a relatively modest 3.2 percent". Hong Kong's Hang Seng Index plunged by 2 percent, while South Korea's Kospi Index slumped by 1.7 percent.
"In all likelihood, the North Korea problem will persist for years to come, with the United States and, increasingly, China attempting to contain and restrain Kim Jong-un".
"While the United States president insists on ramping up the war of words, there is a decreasing chance of any diplomatic solution", Carnell said.
Nitesh Shah, director and commodities strategist at ETF Securities, said Trump's latest comments of "fire and fury" had "made the world nervous about the threat of nuclear war".
Trump's second warning, however, has shaken markets that have been largely resilient this year, swatting away a slew of risks. It was the biggest percentage loss since mid-June.
The S&P fell as much as 0.52 per cent at its session low. The UK trading session took USD/CHF lower to hit a day low of 0.9630 towards the closing bell, but closed up slightly on the day by 0.03%. "The VIX index of implied future volatility on the S+P 500 index (the so-called 'fear index), jumped to a three-month high of over 15, and we saw growth-orientated stocks underperform their value counterparts across developed stock markets".
The dollar index .DXY fell 0.32 percent, with the euro up 0.42 percent to $1.1819.
The dollar widened losses against the yen to hit a two-month low. Japan is the world's biggest creditor country and there is an assumption investors there will repatriate funds in a crisis.
Gold prices spiked to one-week highs Wednesday, on the back of a surge in safe haven demand, after North Korea said it is considering an attack on the USA pacific territory of Guam.
Toyota was up 0.59 per cent at 6,273 yen, Panasonic was up 0.50 per cent at 1,494 yen, and SoftBank was up 0.31 per cent at 8,832 yen.
Disappointing US inflation and jobs data have not helped the dollar.
The 30-year Treasury bond rose 31/32 in price to yield 2.8191 per cent, from 2.867 per cent late on Tuesday.
A weaker-than-expected July consumer price data also supported the recovery.
After touching a more than two-month high at $1,291.86, spot gold last added 0.2 percent to $1,288.81 an ounce. Brent crude, used to price global oils, gained 56 cents to $52.70 in London.
The pan-European FTSEurofirst 300 index lost 1.19 percent. It is poised to end the week down 1.9%.