China captured the US underwater drone in international waters on Thursday.

US President-elect Donald Trump accused the Chinese of "stealing".

Tweeter Trump said:

The Pentagon said the drone, known as an unmanned underwater vehicle (UUV), was being used to carry out scientific research at the time it was captured and demanded its immediate return. It warned China not to repeat such a move in the future.

The initial reports dragged the US $ lower on Friday.

The Chinese defence ministry has now said the vessel would be returned in an "appropriate manner". It is not clear when this might happen.It criticised the earlier US response, calling it "inappropriate and unhelpful".

Observers said the seizure was the most significant military incident between the two countries since a 2001 mid-air collision between a US Navy surveillance aircraft and a Chinese fighter jet that led to the death of a Chinese pilot.

It will likely add to US concerns about the growing military build-up by China in the South China Sea.China has claimed territorial rights over parts of the region but its claims are disputed. It is not clear if China claims the territory in which the drone was seized.

The BBC has more here

Increasing tensions between US and China don't appear to have been really factored into markets but it's something that could well play out more and more in 2017.

And on that cautionary note I'm heading back out to catch up on some much needed and belated Xmas preparations. Enjoy the rest of the week-end one and all and thanks for the brilliant on-going support.

USNS Bodwitch was heading back to collect the drone and conducting research according to US