The Toronto Stock Exchange's S&P/TSX composite index ended down 40.87 points, or 0.27 percent, at 15,033.38, its lowest close since July 7. For the week, the index lost 1.5 percent.

"You are getting a bit of a fear trade that is going on in the market," said Sid Mokhtari, market technician, institutional equity research, CIBC World Markets.

President Donald Trump issued a new threat to North Korea, saying the U.S. military was "locked and loaded" as Pyongyang accused him of driving the Korean peninsula to the brink of nuclear war.

U.S.-North Korea tensions and softer-than-expected U.S. inflation data have pushed bond yields lower this week. Canada's 10-year yield on Friday touched its lowest intraday level in nearly a month at 1.837 percent.

The move lower in yields has weighed on Canadian financial shares, Mokhtari said. Lower yields raise the value of insurance companies' liabilities and reduce net interest margins of banks.

The overall financials group slipped 0.4 percent. Onex Corp dropped 4.7 percent to C$95.75 after mixed revisions by security analysts to the ratings on the private equity company's stock, while Bank of Montreal declined 1.1 percent to C$92.01.

Magna fell 3.1 percent to C$57.91 despite reporting a higher quarterly profit on increased demand in Europe and Asia and raising its full-year sales forecast for the second time in three months.

Optimism that auto parts makers will benefit from a pick-up in economic growth has been offset by worries that the auto industry has reached the peak of its cycle, said Mokhtari.

Telus Corp was also one of the most influential movers on the index, falling 1.6 percent to C$44.82 after it reported lower-than-expected quarterly earnings.

Six of the index's 10 main groups lost ground. The materials group, which includes precious and base metals miners and fertilizer companies, retreated 0.7 percent.

Wheaton Precious Metals Corp fell 5.1 percent to C$24.19 after it reported lower-than-expected revenue after the close on Thursday.

Enerplus Corp jumped 8.3 percent to C$11.65 after the oil and gas company increased its production guidance, while the broader energy group ended 0.1 percent lower.

U.S. crude oil prices settled 0.5 percent higher at $48.82 a barrel.

(Additional reporting by Alastair Sharp; Editing by W Simon and James Dalgleish)

By Fergal Smith