European stocks tumbled early Friday, setting stage for thier first weekly slump in four as the unfolding crisis in Ukraine weighed on the global sentiment.
The geopolitical risk factor has been on for the past few days and the gloomy outlook for Iraqi oil supplies remains very uncertain as violence spreads across the fifth-largest reserve of oil in the world.
Meanwhile, traders are so nervous over the latest developments in Iraq, after the United Stated warned military action in Iraq as Sunni Islamists militants seek to closing in on Baghdad.
The Stoxx 600 lost 0.80 point or 0.23% to 347.03 as of 03:48 a.m. ET, with oil & gas shares plunging the most by 0.82%. A new crisis is taking its toll on Iraq as fighting unfolds between government forces and the radical Islamists who captured the second-largest city this week after soldiers scattered, leaving their uniforms and weapons behind.
Stock traders remained clearly anxious about the unfolding crisis in Iraq, even after the nation claimed a key victory yesterday; Takrit, Saddam Hussein's hometown, was under full control of the military.
The Iraqi government launched air strikes on Sunni insurgent positions in and around the city of Mosul Thursday as Islamists forces marched towards the capital and Kurdish troops seized control of the key oil city of Kirkuk.
According to the Wall Street Journal, Iran sent two battalions of Iranian Revolutionary Guards to help the Iraqi government in its battle against Islamist militants.
The risk sentiment faltered across European bourses in light of growing geopolitical risk in Iraq, besides the lower-than-expected retail sales and jobs data from the world`s largest economy on Thursday.
- France's CAC 40 lost 20.63 points or 0.45% to 4,533.77
- Germany's DAX 30 lost 55.56 points or 0.56% to 9,883.14
- Britain's FTSE 100 lost 30.71 points or 0.45% to 6,812.40.
Original headline: European stocks retreat as Iraq descends into chaos
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