US stocks stay strong as Iraq, Ukraine jitters send world stocks tumbling

Iraq and Gaza made the world financial markets nervous Friday, though Chinese stocks rose after surprisingly strong growth in exports.  Investors fretted about Russia's decision to retaliate against sanctions with a ban on food imports from the West. Meanwhile, President Barack Obama authorized US airstrikes in northern Iraq.

 World stocks sank Friday as jitters over the crises in Iraq and Ukraine escalated, but Chinese stocks rose after surprisingly strong growth in exports.

KEEPING SCORE: Futures augured a down session on Wall Street. Dow futures were down 0.4 percent at 16,260 and S&P 500 futures lost 0.4 percent to 1,896.80. European shares were down but trimmed their opening losses. Germany's DAX shed 0.8 percent to 8,970.34 and France's CAC 40 dropped 0.3 percent to 4,138.15. London's FTSE 100 retreated 0.6 percent to 6,560.98.

ASIA'S DAY: Japan's Nikkei 225 led Asian declines, sliding 3 percent to 14,778.37 as the yen strengthened. South Korea's Kospi lost 1.1 percent to 2,031.10 and Hong Kong's Hang Seng shed 0.2 percent to 24,331.41. In mainland China, the Shanghai Composite Index climbed 0.3 percent to 2,194.42. Australia's S&P/ASX 200 fell 1.3 percent to 5,435.30. Markets in India and Southeast Asia fell.

GEOPOLITICS: Investors fretted about the effect of Russia's decision to retaliate against sanctions over the Ukraine crisis with a ban on food imports from the West. Meanwhile, President Barack Obama authorized U.S. airstrikes in northern Iraq, warning they would be launched to defend American troops and civilians under siege from Islamic State militants. Japanese stocks declined as the geopolitical tensions spurred buying in the yen, seen as a safe haven currency. A stronger yen makes Japanese stocks pricier for overseas investors.

THE QUOTE: Russia's food ban is a "negative for world markets," said Ric Spooner, chief analyst at CMC Markets in Sydney. He said the ban would "have the knock on effect of driving down prices in other markets as exporters seek to find new outlets for produce that may otherwise have been sold to Russia."

CHINA DATA: In the latest update on the state of the world's No. 2 economy, China released July trade figures that showed exports jumped 14.5 percent in July compared with a year earlier. The figure was a surprise for economists, most of who were predicting that the figure would be lower than the 7.2 percent growth recorded in June. China's vast manufacturing industry is a key part of the overall economy, which rebounded slightly in the most recent quarter after slowing in the first quarter. July imports, however, showed signs of weakness.

ENERGY: Benchmark U.S. crude oil for September delivery added 57 cents to $97.92 a barrel in electronic trading on the New York Mercantile Exchange, with the rise suggesting jitters about possible disruptions to supplies from Iraq and Russia. The contract rose 42 cents to settle at $97.34 on Thursday. Brent crude, which is used to price oil sold internationally, added 90 cents to $106.35 in London.

CURRENCIES: The euro rose to $1.3387 from $1.3361 in late trading Thursday. The dollar fell to 101.78 yen from 102.11 yen.

Meanwhile, U.S. stock futures edged upward in premarket trading, according to Reuters:

"U.S. stock index futures edged up on Friday, reversing sharp losses earlier that came on the back of a U.S. government authorization of air strikes in Iraq, which added to concerns about escalating conflicts in Ukraine and the Gaza Strip.

After falling 15 points at its lowest overnight, S&P 500 e-mini futures were up 4 points and fair value - a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract - indicated a slightly higher open. Dow Jones industrial average e-mini futures edged up 17 points and Nasdaq 100 e-mini futures rose 6 points."

(Reporting by Rodrigo Campos; Editing by Bernadette Baum)