Stocks ended more than one percent down in Seoul while the won slumped to a three-week low against the dollar as the U.S. president and South Korea´s volatile neighbour dramatically ramped up their war of words.
Health care equipment and services company Henry Schein declined amid a broader slide by health care stocks.
With the tense mood pushing European shares down for a third day and Wall Street set to fall again, global stocks were on course for their worst week since Donald Trump won November's USA presidential election.
"Japanese equities hadn't been rising much despite positive earnings results, so investors had started jumping at shadows, doubting whether they should really be holdings onto Japanese stocks".
The Standard & Poor's 500 index fell 20 points, or 0.8 percent, to 2,453 as of 10:09 a.m. Dillard's slumped 15.5 percent after the chain booked a loss for the second quarter as increased inventory led to big discounts. Several hours later, North Korea said it was considering a strike that would create "an enveloping fire" around Guam, the Pacific island where the United States stations military personnel.
The pan-European FTSEurofirst 300 index lost 1.11 percent.
Oil prices gained 60 cents to $50.16 USA per barrel. Gold hit its highest level in nearly two months after Trump added to the geopolitical anxiety by boasting of the strength of the US nuclear arsenal.
The Toronto Stock Exchange's S&P/TSX composite index was down 39.02 points to 15,217.33 in a broad-based decline that saw many sectors finish in the red while bullion stocks surged almost 1.9 per cent. Alliance Data Systems fell $6.28, or 2.7 percent, to $225.64.
Seagate Technology gained 2.3 percent after investor ValueAct disclosed that it had acquired a 7.2 percent stake in the digital storage company.
MARKETS OVERSEAS: Major indexes in Europe were headed lower. The stock lost $2.97 to $8.87.
On the other hand, gold stocks have shown a strong move to the upside on the day, driving the NYSE Arca Gold Bugs Index up by 1.5%. Lam Research Corp. climbed $4.82, or 3.2 percent, to $154.26. The stock fell 85 cents to $12.76.
Gold added $3.90 to settle at $1,294 an ounce.
Bond prices rose. The yield on the 10-year Treasury note slipped to 2.19 percent from 2.20 percent late Thursday.
Benchmark U.S. crude added 39 cents to settle at $49.56 a barrel on the New York Mercantile Exchange. Britain's FTSE 100 was down 1.1 percent.
Oil prices edged higher after a report showed U.S. refineries processed record amounts of crude in the latest week, eating into inventories, although a surprise jump in gasoline stockpiles limited gains. US gold futures gained 1.63 percent to $1,283.20 an ounce. Wholesale gasoline was little changed at $1.62 a gallon, heating oil rose 2 cents to $1.65 a gallon and natural gas rose 6 cents to $2.88 per 1,000 cubic feet.
German bond yields fell, gold and the Japanese yen surged and the leveraged bets on higher-yielding currencies such as the Australian dollar took a beating. It was last up 0.0 percent at 1.1329 per euro.
7 white helmets rescuers shot dead in gun attack
They have since gained widespread global renown for their daring rescues, with footage often taken and circulated on social media. White Helmet volunteers are trained in Turkey to provide emergency medical assistance to civilians caught in Syria's civil war.