The Nasdaq composite lost 13.31 points, or 0.2 percent, to 6,370.46.
London's benchmark FTSE 100 index fell back 1.1 percent to 7,415.78 points, driven by losses in the commodity sector.
Heightened geopolitical tensions between the USA and North Korea also meant that the dollar/yen pair would have a hard time responding to positive data, Lien added. "And while risks remain elevated from a geopolitical perspective, valuations are not necessarily excessive, though full".
Later on Friday, investors will look to U.S. July consumer price data for hints on the Federal Reserve's policy outlook and near-term moves in the dollar.
An Associated Press report that the USA and North Korea have been engaged in back channel talks (https://apnews.com/686ac7c761694b28b67793a1d8297145?link=mktw) for several months even as they exchange incendiary threats may also help to soothe jitters.
Shane Oliver, head of investment strategy at AMP Capital in Sydney, said: "What has changed this time is that the scary threats and war of words between the United States and North Korea have intensified to the point that markets can't ignore it".
Mr Trump ratcheted up his rhetoric toward North Korea on Thursday, saying it should be "very, very nervous" if it even thinks about attacking the United States or its allies, after Pyongyang said it was making plans to fire missiles over Japan to land near the US Pacific territory of Guam.
The firm tracks about $2.46 billion of the island's outstanding municipal debt.
Stocks have moved mostly higher in morning trading on Friday following the sell-off seen in the previous session.
Silver gained 47 cents, or 2.9 percent, to $16.86 an ounce.
Apart from geopolitical worries, some technical analysts like Tom McClellan, editor of the McClellan Market Report, blamed seasonality for this week's sharp retreat given August's record as a weak month for stocks.
The VIX, or volatility index widely used as a proxy to gauge market fear, soared by 44 percent to its highest level since Trump was elected.
Bond prices rose. The yield on the 10-year Treasury note fell to 2.23 percent.
Nonetheless, most Americans (72 percent) are uneasy about the possibility of conflict with North Korea, according to a CBS News poll, and 61 percent say they are uneasy about the president's approach to the situation.
The index was down 1.44% or 108.12 points to close at 7389.94 on Thursday in its worst performance for four months.
Low interest rates are generally regarded as good for business, so the portents were evidently good enough to lure back a few stock market bulls.
Across the continent, healthcare stocks outperformed after Novo Nordisk A/S, a Danish pharmaceutical company, reported second-quarter operating profit of 13.4 billion kroner versus estimates of 12.7 billion. Today we have seen China step into the fray, promising to stay neutral if North Korea attacks first but to intervene if the US or South Korea attacks first.
After a dip of as much as 0.52 percent earlier in the day, Wall Street's three major indexes bounced off intraday lows.
VP-elect Naidu dubs Ansari's Muslim insecurity remark 'political agenda'
What exactly, I am not the final word on it, but I think there are enough people in the country who are anxious about it. The chair is like an empire in a cricket witnessing players, from where you can see it all but not become a part of it.