Britain's FTSE 100 has shed £60billion this week, amid rising fears the Kim Jong-un's rogue state is heading to nuclear war with the US.
The top stock index sank another one per cent this morning to hit a one-month low of 7,305.
France's CAC and Germany's DAX were also down, after panic hit Asian markets overnight, as well as Wall Street's Dow Jones and S&P 500.
The Dow Jones is down one per cent yesterday and could see further losses when trading opens Friday.
Sell-offs have gathered pace as North Korea said it has plans to fire four air missiles at US territory of Guam.
President Trump warned Pyongyang should be "very very nervous" if it attacks and that his recent promise of unleashing "fire and fury" on North Korea were not tough enough.
The so-called fear index, or volatility index, has surged higher and demand for capital safe havens has leapt.
Gold prices are now up by more than two per cent to reach a two-month high amid the heightened tensions.
David Madden, market analyst at CMC Markets UK, said: "The tension between the US and North Korea is still dominating the news and it is looming over the financial markets.
"The uncertainty surrounding the situation has been the main driver of the markets recently, and the enormous surge in the volatility index (VIX) tells us exactly what traders are thinking.
"Global equity markets have been severely shaken by the standoff between the two countries, and oddly enough, the European stock markets seem to have been the worst performers.
"The CAC 40 and the DAX have been in decline since May and June respectively, and now the sell-off has accelerated it.
"Gold because of its safe haven status was pushed to its highest level in over two months. Dealers have been adopting a risk-off strategy, and the exodus from equities has boosted gold, the Swiss franc and the Japanese yen."
Lukman Otunuga, research analyst at FXTM added: "An air of caution is lingering across the financial markets during early trading on Friday, as investors closely monitor the escalating tensions surrounding the United States and North Korea.
"The war of words between the two nations is putting investors on high alert and more comments from President Trump overnight, has resulted in additional risk-off being seen in the markets.
"Money is jumping into safe-havens like Gold and the Japanese Yen, while the Korean Won has fallen to its lowest level in a month- after extending its losses to around two per cent for the week."