Analysts pointed to the harsh threats and saber rattling from US President Donald Trump, including a message Wednesday on Twitter boasting that the US nuclear arsenal was now "more powerful than ever before."
UN Secretary-General Antonio Guterres said he was deeply concerned about the tensions on the Korean Peninsula and was "troubled" by the increase in confrontational rhetoric.
In Europe, equities dived with London losing 0.6 percent, while Frankfurt shed 1.1 percent and Paris fell 1.4 percent.
The news was also greeted with dismay by traders in Asia, with Tokyo down 1.3 percent, Hong Kong losing 0.4 percent and Seoul registering a 1.1-percent decline.
US stocks also fell, lingering in negative territory the entire session, but notching smaller declines than in overseas markets. The Dow shed 0.2 percent.
"It is a market that is beginning to encounter some major threats and of course the threat is geopolitical," said Peter Cardillo, chief market economist at First Standard Financial.
Uncertainty over North Korea also reverberated in the foreign exchange market, where safe-haven currencies such as the Japanese yen and Swiss franc rallied.
"Saber-rattling between two of the world's least predictable leaders caused a wave of risk aversion to wash over global markets, fueling demand for traditional safe harbors," said Joe Manimbo, senior market analyst at Western Union Business Solutions.
Among other markets, oil prices advanced after a US Department of Energy report showed lower oil inventories.
Dow member Disney dropped 3.9 percent as it reported flat third-quarter revenues due in part to weakness in its cable subscription business.
Disney also announced it will launch two new streaming television services including one for its ESPN-branded sports channel, while ending its deal with Netflix as it shifts towards direct content distribution. Netflix lost 1.5 percent.
Charter Communications rose 2.9 percent on news Altice is exploring a bid for the cable giant. Altice USA, the subsidiary of the French company, added 0.1 percent.
KEY FIGURES AROUND 2050 (4:50 a.m. Thursday in Manila)
New York - Dow: DOWN 0.2 percent at 22,048.70 (close)
New York - S&P 500: DOWN less than 0.1 percent at 2,474.02 (close)
New York - Nasdaq: DOWN 0.3 percent at 6,352.33 (close)
London - FTSE 100: DOWN 0.6 percent at 7,498.06 points (close)
Frankfurt - DAX 30: DOWN 1.1 percent at 12,154 (close)
Paris - CAC 40: DOWN 1.4 percent at 5,145.70 (close)
EURO STOXX 50: DOWN 1.4 percent at 3,467.43
Tokyo - Nikkei 225: DOWN 1.3 percent at 19,738.71 (close)
Hong Kong - Hang Seng: DOWN 0.4 percent at 27,757.09 (close)
Shanghai - Composite: DOWN 0.2 percent at 3,275.57 (close)
Euro/dollar: UP at $1.1758 from $1.1748 at 2100 GMT on Tuesday
Pound/dollar: UP at $1.3003 from $1.2989
Dollar/yen: DOWN at 110.02 yen from 110.36 yen
Oil - Brent North Sea: UP 56 cents at $52.70 per barrel
Oil - West Texas Intermediate: UP 39 cents at $49.56 per barrel
source: news.abs-cbn.com
