Gold, oil, and safe haven assets from the Swiss franc to German government debt headed for strong weekly gains Friday after the Russia-Ukraine conflict escalated, while European gas price rises and poor economic data heaped pressure on the euro.
In a week when Russia lowered its threshold for using nuclear weapons and fired a hypersonic intermediate-range ballistic missile at Ukraine, gold was set for its best week in a year.
The euro tumbled to its lowest since December 2022, last at $1.0432 and down 0.4% on the day, after surveys showed business activity in the bloc took a surprisingly sharp turn for the worse this month.
European gas contracts hit a one-year high, broadening concerns for the euro zone economy already pressured by U.S. President-elect Donald Trump's proposed trade tariffs, Germany's government collapse and France's wide budget deficit.
Brent crude futures gained 0.5% on Friday to $74.60 a barrel, up 5% this week, after Russia responded to the U.S. and UK allowing Kyiv to strike its territory with Western weapons by firing a hypersonic intermediate-range missile at Ukraine's Dnipro.
"Those weapons typically carry nuclear warheads," said analysts at ANZ Bank. "The exchange indicates the war has entered a new phase, raising concerns around disruptions to (oil) supply."
The index tracking the U.S. dollar against rival currencies climbed to a 13 month peak of 107.15 on Friday, boosted by haven buying as well as expectations that Trump's America-first policies would boost growth and inflation.
Bets that Trump's administration would take a lighter-touch approach to regulation propelled bitcoin to the brink of $100,000 for the first time.
Gold was up 1% at $2,688 an ounce on Friday and 5.2% higher for the week, while sterling dropped 0.4% on the day to a six-month low of $1.253.
Gold rose to a two-week peak on Friday, heading for the best weekly performance in more than a year. Spot gold jumped 1.4% to $2,707.05 per ounce as of 1022 GMT, hitting its highest since Nov. 8.
Traders expect Trump's tariffs to boost domestic consumer prices, with money markets pricing about a 58% chance of a Federal Reserve rate cut next month, down from 83% a week ago. .
That has restricted haven buying of U.S. Treasuries, usually considered the world's least risky and most liquid financial assets, with the benchmark ten-year yield down just 2 basis points this week at 4.3892%.
Geopolitical concerns have raised appetite for European haven assets however.
Germany's 10-year Bund yield dropped 7 bps to 2.244% on Friday, reflecting forecasts for faster European Central Bank rate cuts. The Swiss franc, at €0.9264, was on course for a 1.7% weekly gain.
In equities, traders' reassessment of artificial intelligence chip-making giant Nvidia's prospects following a lukewarm response to its results earlier this week supported global stocks.
MSCI's world stock index was set for a 1.1% weekly rise although Europe's Stoxx 600 traded flat to head for its fifth straight weekly loss.
Britain's exporter-heavy FTSE 100 got a 0.7% daily boost from sterling weakening against the dollar, set for its best week since August, although futures hinted at mild losses for Wall Street's blue-chip S&P 500 later in the day.
In Asia, chipmakers' stocks helped with Taiwanese gain 1.5%, South Korea's tech-heavy rose 0.8% and Japan's Nikkei advancing 0.8%.
Disappointing corporate earnings weighed on sentiment in China, however, with the blue-chip CSI300 index down 3.1% on Friday and Hong Kong's Hang Seng Index 1.9% lower.
In India, shares of Adani Group companies and their dollar bonds remained under pressure following Chairman Gautam Adani's indictment for fraud by U.S. prosecutors.
Data in Japan showed core inflation held above the central bank's 2% target in October, leading markets to price about a 57% chance of a 25-basis-point Bank of Japan rate hike in December although the yen remained weak.
The Japanese currency was last at 154.82 per dollar after sliding 4% this quarter.