Stocks across Europe closed sharply lower Wednesday as tensions between the U.S. and North Korea escalated. In Frankfurt, the DAX 30 DAX, -1.12% dropped 1.1% to 12,154.00, and in Paris, the CAC 40 index PX1, -1.40% was fell 1.4% to 5,145.70. Those marked the worst sessions for those benchmarks since July 21, FactSet data showed.

U.S. stocks closed down Wednesday, but off session lows as tensions between North Korea and the U.S. added a dollop of geopolitical uncertainty to markets, and as high-profile companies disappointed with their quarterly results. The Dow Jones Industrial Average DJIA, -0.17% declined 36.64 points, or 0.2%, to close at 22,048.70, after briefly losing its grip on the psychological milestone of 22,000. Fourteen out of the average's 30 components finished lower.

Asian stocks steadied and US Treasury bond prices fell slightly on Thursday as the risk aversion triggered by the latest flare up of tensions between the United States and North Korea began to settle.