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Markets nervous as Obama authorises Iraq air strikes | |
(about 2 hours later) | |
Stock markets have fallen, while the prices of oil and gold have risen, as worries grow about the impact of conflicts in Iraq and Ukraine. | |
Markets were hit by news that US President Barack Obama had authorised air strikes against Islamic militants in northern Iraq. | |
The UK's FTSE 100 dropped 1% in early trade before recovering slightly, while other European indexes also fell. | |
Japan's Nikkei index fell nearly 3% to close at 14,778, a two-month low. | |
Rising pressure | |
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. |
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. | 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 Russian government had 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. | |
As trading got under way in Europe on Friday the major stock markets fell by about 1%, although they then recovered some ground later on. | |
In late morning trade, the FTSE 100 was down 0.6% at 6,559.05, Germany's Dax was 0.85% lower at 8,962.31 while France's Cac 40 index slid 0.4% to 4,134.56. | |
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. | |
"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." | |
Gold rises | |
Oil prices rose following Barack Obama's comments, with Iraq being the second largest producer in oil cartel Opec. | |
The price of Brent crude rose 88 cents to $106.32 a barrel, while US crude climbed 72 cents to $98.06 a barrel. | |
Shares in London listed oil company Afren opened down 7% after it said it had suspended output at its Barda Rash oilfield in Iraqi Kurdistan, because Islamist militants had advanced closer. | |
The price of gold - which is seen as a haven asset in times of uncertainty - rose to $1,318.80 an ounce, and is up nearly 2% on the week. | |
On the currency markets, the US dollar fell 0.4% to 101.68 against the Japanese yen, a two-week low. | |
Market pressure | |
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. | 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 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 latest data puts China's trade surplus at a record $47.3bn (£28bn) for July. |