By the close of trading, the FTSE 100 was down 84.46 points, or 1.1%, to 7,305.48, having dropped 1.4% on Thursday.
The VIX Index - commonly called the fear gauge - jumped to close at its highest level since the USA election.
Trump took specific aim at North Korean leader Kim Jong Un, saying, he had "disrespected our country greatly", and would not be "getting away with it".
Efforts by the USA to dial down rhetoric have failed to shift the bearish mood among investors.
The dollar pared gains slightly after Trump's North Korea comments, still supported by the job market data which underscored the view that the Federal Reserve has ammunition to continue on its tighter monetary policy path.
Nervous investors drove shares lower earlier in the week, after President Trump declared Tuesday that the US would react with "fire and fury" to further nuclear provocations from North Korea.
"That may have weighed a little bit" on markets, said Phil Guarco, global investment specialist J.P. Morgan Private Bank.
'Traders are on red alert as the mention of war has sent them running for cover. Were the situation to escalate, much more than the stock markets would be at risk.
Worries about increased U.S. The Dow Jones Industrial Average fell 204.69 points, or 0.93 percent, to close at 21,844.01, the S&P 500 lost 35.81 points, or 1.45 percent, to 2,438.21 and the Nasdaq Composite dropped 135.46 points, or 2.13 percent, to 6,216.87. Netflix lost 1.5 per cent.
Gold miners Randgold Resources and Fresnillo closed as the top two gainers in London's blue-chip index, ending up 1.9% and 4.9%, respectively.
Commodity-related stocks are among the worst performers against the backdrop of heightened political uncertainty after Trump further ratcheted up the rhetoric. The benchmark Kospi tumbled 39.76 points or 1.7% to 2,319.71, its lowest level since May 24th.
The Japanese yen hit an eight-week high against the USA dollar, while spot gold also reached a two-month high.
Microsoft also managed to avoid market selloff with a 0.5 percent increase.
Gold enjoyed another strong session as traders sought out safe havens, with the price lifting 0.1% to 1,287.8 United States dollars an ounce.
Investors will also be keeping an eye out on retail results as second-quarter earning season winds down.
Shares of US department stores Kohl's and Macy's were weak after their results.
The Swiss franc, a barometer of risk sentiment, surged 0.6 percent to 0.9688 francs against the US dollar, reversing a two-week losing streak.
Gold was the big victor Wednesday as stocks pared back to moderate losses and Walt Disney (DIS) dragged on the Dow, while Netflix (NFLX) and Priceline Group (PCLN) hindered the Nasdaq and retailers took some brutal hits after reporting second-quarter results.