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Asian markets fall after US authorises Iraq airstrikes Stock markets hit as Obama authorises Iraq air strikes
(about 2 hours later)
Markets from Japan to Australia have suffered falls after US President Barack Obama authorised air strikes in northern Iraq. Stock markets in Europe and Asia have fallen as worries grow about the impact of conflicts in Ukraine and Iraq.
Investors are worried the escalating tension will hurt global growth. And they are also jittery about ongoing hostility between the west and Russia. Shares were hit by news that US President Barack Obama had authorised air strikes against Islamic militants in northern Iraq.
Japan's benchmark Nikkei index fell by nearly 3% to close at 14,778 points, a two-month low. In Japan, the benchmark Nikkei index fell by nearly 3% to close at 14,778 points, a two-month low.
Stocks in Australia fell to a five-week low. In Europe, the FTSE 100 index fell 1% to 6,531.80, while Germany's Dax and France's Cac indexes saw similar falls.
The S&P ASX 200 index shed 1.3% to close at 5,435 points. Investors are worried the escalating tension will hurt global growth.
Australia's Prime Minister Tony Abbott has dubbed Russia "a bully" and threatened stronger sanctions against the country, following Russia's ban on most Western food imports. The price of Brent crude oil rose 1% to $106.28 a barrel and the price of gold was up 1% at $1,377 an ounce. The prices of both of these commodities tend to rise along with political tensions.
Earlier this week, the Russian government halted the import of food and food products from the West, including the US, European Union and Australia. Russia's move is a retaliation against sanctions related to the crisis in Ukraine. Will Hedden, from market watchers IG, said: "It is another tough start to trade in Europe... safe-haven trading is present and a red end to another red week looks firmly entrenched for equities.
China exception "The weekend will feel like a long time for potential bad news to fester after many geopolitical events have come to a head all at the same time."
But not every market in the region had a negative reaction to ongoing geopolitical tensions. Market pressure
China escaped the market falls, due to strong domestic factors. The latest trade data showed a 14.5% jump in exports for July, when compared to one year ago. The surge in exports is fuelling hopes that strong external demand will keep the Chinese economy on the growth track for the rest of the year.
The latest data puts China's trade surplus at a record $47.3bn (£28bn) for July.
The benchmark Shanghai Composite index was up by 0.2% to 2,193 points.
Air strikes
Just as the Asian markets started their trading sessions on Friday morning, US President Barack Obama announced he had authorised air strikes against Islamic militants in northern Iraq but would not send US troops back to the country.Just as the Asian markets started their trading sessions on Friday morning, US President Barack Obama announced he had authorised air strikes against Islamic militants in northern Iraq but would not send US troops back to the country.
He said Islamic State (IS) fighters would be targeted to prevent the slaughter of religious minorities or if they threaten US interests.He said Islamic State (IS) fighters would be targeted to prevent the slaughter of religious minorities or if they threaten US interests.
No strikes have been made yet but the US has made humanitarian air drops to Iraqis under threat from the militants.No strikes have been made yet but the US has made humanitarian air drops to Iraqis under threat from the militants.
IS has seized Qaraqosh, Iraq's biggest Christian town, forcing locals to flee. Even before news of possible air strikes in Iraq, markets had been under pressure this week because of worries over the situation in Ukraine, with reports that Russia was massing thousands of troops on the border.
The Sunni Muslim group, formerly known as Isis, has been gaining ground in northern Iraq since it launched its onslaught in June. The Russian government also announced it was imposing a "full embargo" on food imports from the EU, US, Australia and some other countries, in response to sanctions over Ukraine.
It now controls large swathes of Iraq and Syria and says it has created an Islamic caliphate in its territory. On Friday, Australia's Prime Minister Tony Abbott called Russia "a bully" and threatened stronger sanctions against the country, following the ban.
Australia's S&P ASX 200 index shed 1.3% to close at 5,435 points.
China's stock market escaped the falls seen elsewhere, with the benchmark Shanghai Composite index up 0.2% to 2,193, after the latest trade data showed a 14.5% jump in exports for July, compared with a year ago.
The surge in exports is fuelling hopes that strong external demand will keep the Chinese economy on the growth track for the rest of the year.
The latest data puts China's trade surplus at a record $47.3bn (£28bn) for July.