* Yen and Swiss franc make gains on U.S. dollar
* South Korea stocks off 1 pct, Nikkei lose 0.9 pct
* Gold spikes to 10-month peak, Treasuries well bid
* Copper reaches three-year top on strong factory activity
SYDNEY, Sept 4 (Reuters) - The Japanese yen, gold and sovereign bonds all rose on Monday as North Korea's latest nuclear test, and reports Pyongyang was making preparations for another missile launch, provoked the usual knee-jerk shift to safer harbours.
The dollar was marked down to 109.57 yen, having been as low as 109.22 and off a whole yen from late on Friday.
Japan is the world's largest creditor nation and traders tend to assume Japanese investors would repatriate funds at times of crisis, thus pushing up the yen. Many wonder, however, if Japanese assets would really remain in favour if an actual war broke out in Asia.
Japan's Nikkei did not take the news well, losing 0.9 percent. MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.75 percent with South Korea's main index down 1 percent.
"Like a bad horror movie, the North Korea saga intersperses moments of calm, with occasional action to jolt you out of your chair," said ING's head of Asian research than Rob Carnell.
"But we have been here now many, many times," he added. "Unless this is the precursor to U.S. military action, which we doubt, then in a little over a day or two, tensions will calm again, making this a good buying opportunity for investors with a strong enough nerve."
European bourses looked set to open lower with Eurostoxx 50 and FTSE futures off 0.4 percent and the DAX contract down 0.6 percent.
North Korea on Sunday conducted its sixth and most powerful nuclear test, which it said was of an advanced hydrogen bomb for a long-range missile, prompting the threat of a "massive" military response from the United States if it or its allies were threatened.
Speaking outside the White House after meeting with President Donald Trump and his national security team, U.S. Defense Secretary Jim Mattis said Trump asked to be briefed on all available military options.
On Monday, news agency Yonhap reported North Korea was seen to be making preparations for another ballistic missile launch, possibly of ICBM-class.
Futures on 10-year U.S. Treasuries climbed 7 ticks, while yields on Japanese 10-year government debt rallied to their lowest since last November.
E-Mini futures for the S&P 500 dipped 0.4 percent, though U.S. markets will be closed on Monday for the Labor Day holiday.
ECB MEETING LOOMS
The dollar slipped to 0.9591 Swiss francs from 0.9646, and was off 0.25 percent against a basket of currencies at 92.583. Gold hit a 10-month high and was last up 0.9 percent at $1,337.14.
The euro was 0.3 percent firmer at $1.1898, though investors were wary ahead of a European Central Bank meeting on Thursday.
There have been reports some at the ECB are unhappy with the euro's strength and are in no rush to signal the start of a tapering in its massive balance sheet.
Wall Street had ended last week on a mildly positive note after a tepid U.S. jobs report kept expectations muted for another interest rate hike this year.
The Dow ended Friday with a gain of 0.18 percent, while the S&P 500 added 0.20 percent and the Nasdaq 0.1 percent.
U.S. job growth slowed more than expected in August after two straight months of hefty increases. Nonfarm payrolls increased by 156,000 last month, while economists had forecast an increase of 180,000.
On a brighter note, the Institute for Supply Management reported its factory activity index soared to 58.8 in August, the highest reading since April 2011.
That was just the latest sign that global factory growth was gaining traction and added to bullishness on industrial metals. Copper climbed 1 percent on Monday to hit its highest in three years. In the oil market, prices were subdued as shutdowns of U.S. production following Hurricane Harvey were balanced by an expected downturn in crude demand as the storm knocked out refineries along the Gulf of Mexico.
Brent crude shed 54 cents to $52.21, while U.S. crude eased 4 cents to $47.25 a barrel.
(Reporting by Wayne Cole in Sydney; Editing by Peter Cooney & Shri Navaratnam)