Russian stocks undermined by tensions between USA and N.Korea

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"European indices are following their Asian counterparts lower once more today, as the risk aversion seen over the past two days continues apace", said IG market analyst Joshua Mahony in a note.

The negative headlines provided many investors with an opportunity to pocket some of their recent gains following a string of record highs fueled by strong corporate earnings.

At 12:36 p.m. ET (1636 GMT), the Dow Jones Industrial Average was down 158.98 points, or 0.72 percent, at 21,889.72 and the S&P 500 was down 27.37 points, or 1.11 percent, at 2,446.65. U.S. Secretary of State Rex Tillerson said he did not believe there was an imminent threat. "I think a few investors are capitulating to it".

The Nasdaq Composite was down 37.30 points, or 0.59%, at 6 315.03.

Stock movers: Henkel fell 3.4% after the maker of Schwarzkopf hair care products, Right Guard deodorant and Persil detergent posted second-quarter organic sales growth of 2.2%, which was below consensus of 3.2%, according to Investec.

Indexes: In London, the FTSE 100 moved down 0.6% to 7,452.24, and Spain's IBEX 35 gave up 0.3% at 10,563.60.

MARKETS OVERSEAS: In Europe, Germany's DAX was down 1.1 percent, while France's CAC 40 fell 1.4 percent.

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"If you strip away what's going on in North Korea, and if you strip away what's going on in Washington, which are things that are tougher to predict, the economy, the global recovery, earnings, it all paints a very positive picture for the rest of the year", Kravetz said.

Separately, US producer prices unexpectedly fell in July, recording their biggest drop in almost a year, weighed down by declining costs for services and energy products. It's still the highest it's been since May.

The consumer price data, which pointed to weak inflation, could cause the Federal Reserve to hold off from raising rates again this year.

The U.S. equity market is hovering near record levels and volume has been tepid following the onset of summer. The Fed, which raised its key interest rate in March and June, has signaled it plans a third rate increase before the end of this year.

Benchmark U.S. crude rose 23 cents to settle at $48.82 a barrel on the on the New York Mercantile Exchange.

OIL: Benchmark U.S. crude lost 24 cents to $48.37 per barrel on the on the New York Mercantile Exchange while Brent crude, used to price global oils, declined 20 cents to $51.70 per barrel in London.

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