The statement concluded with a final warning: "The DPRK regime's actions will continue to be grossly overmatched by ours and would lose any arms race or conflict it initiates".
The FTSE 100 index of leading British shares was 0.6 per cent lower.
North Korea, pursuing missile and nuclear weapons programs in defiance of U.N. Security Council resolutions, accuses the Washington of devising a "preventive war" and has said any plans to execute this would be met with an "all-out war, wiping out all the strongholds of enemies, including the USA mainland".
"Trump's response was aggressive and that's why the (stock) market turned lower", said Ken Polcari, director of the NYSE floor division at O'Neil Securities. The hope, and perhaps the expectation, is that this latest round of rhetoric will also turn out to be just talk, said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management.
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 pan-European FTSEurofirst 300 index .FTEU3 rose 0.18 percent and MSCI's gauge of stocks across the globe .MIWD00000PUS shed 0.19 percent after touching a record intraday high. Disappointing company earnings also helped pull the market lower, with financial and consumer-focused companies outweighing gains among health care stocks. The Shanghai Composite Index lost 0.2 percent to 3,275.57 and Hong Kong's Hang Seng was off 0.3 percent at 27,757.09.
These are some of strongest comments Mattis has made on North Korea.
FED WATCH: As well as monitoring the geopolitical backdrop, investors are looking ahead to an appearance Thursday by Bill Dudley, president of the U.S. Federal Reserve Bank of NY, for signs of the Fed's outlook on the economy.
The dollar index .DXY rose 0.23 percent, with the euro EUR= down 0.39 percent to $1.1747.
The pound bought $1.2999, up slightly from $1.2993 late Tuesday in NY.
CURRENCIES: The dollar fell to 109.97 yen from 110.48 yen late Tuesday.
Korea's Kospi stock benchmark lost 1.1% as geopolitical concerns grew, while US stocks traded modestly lower (http://www.marketwatch.com/story/US-stock-futures-pull-back-on-rising-north-korea-tensions-2017-08-09).
The 10-year notes US10YT=RR last fell 3/32 in price to yield 2.2655 percent, from 2.257 percent late on Monday. If it goes into Treasury Bonds then interest rates will fall. Brent crude, used to price global oils, gained 16 cents to $52.30 in London.
OIL: Benchmark U.S. crude added 7 cents to $49.24 a barrel on the New York Mercantile Exchange.
Gold prices turned higher after unease over North Korea, reversing the downward move after the jobs data lifted the dollar.
Sterling was last trading at $1.3006, up 0.02 percent on the day.
Spot gold added 1.3 percent to $1,277.15 an ounce.