Ukraine crisis, Iraq push down world markets

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

Futures augured sharp falls on Wall Street. Dow futures were down 0.6 percent at 16,216 and S&P 500 futures lost 0.7 percent to 1,891.20. In early European trading, Germany's DAX shed 1.5 percent to 8,905.60 and France's CAC 40 dropped 0.9 percent to 4,113.23. London's FTSE 100 retreated 1 percent to 6,531.80.

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 24,329.08. 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.

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.

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."

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.

Benchmark U.S. crude oil for September delivery added 78 cents to $98.12 a barrel in electronic trading on the New York Mercantile Exchange, with the rise suggesting jitters about possible disruptions to supplies from energy rich Russia. The contract rose 42 cents to settle at $97.34 on Thursday. Brent crude, which is used to price oil sold internationally, added $1.05 to $106.48 in London.

The euro rose to $1.3380 from $1.3361 in late trading Thursday. The dollar fell to 101.69 yen from 102.11 yen.