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Asian shares weaker as Iraq strife worries investors, China data ahead

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Investing.com -

Investing.com - Asian stocks moved lower on Friday, as concerns over growing instability in Iraq hit sentiment ahead of a flurry of Chinese economic data.

The Nikkei 225 fell after the Bank of Japan kept policy steady, though the yen weakened, providing support.

The unrest in Iraq also pushed the price of oil 0.8% higher in Asian trade, with the July Nymex crude futures contract trading at $107.33 per barrel, adding to a 2% jump on Thursday.

Furthermore, Asia got a negative lead from U.S. stocks, with Wall Street ending lower after retail sales numbers missed expectations.

South Korea's KOSPI lost 1% and Australia's S&P/ASX 200 dropped 0.8%.

The higher cost of oil boosted shares in energy companies, while hurting firms dependent on fuel, such as airlines. In Australia, Woodside Petroleum Ltd (ASX:WPL) added 1.9% and Qantas Airways Ltd (ASX:QAN) lost 2.4%.

Hong Kong's Hang Seng Index was mostly steady ahead of the data, up 0.1%, and the Shanghai Composite Index was flat.

In China comes retail sales and industrial production data for May at 1330 Beijing (0530 GMT). Retail sales rose 11.9% year-on-year in April and are expected to have accelerated to 12.1%. Industrial production, which came in at a gain of 8.7% year-on-year in April, is expected at a rise of 8.8%.

Overnight, U.S. stocks fell after conflict in Iraq threatened to morph into a full-blown civil war that could roil the Middle East and send global oil prices climbing and hamper recovery.

The Dow 30 fell 0.65%, the S&P 500 index fell 0.71%, while the NASDAQ Composite index fell 0.79%.

Iraqi insurgents tied to al-Qaeda reportedly took full control of the northern oil city of Kirkuk on Thursday and advanced closer to the capital, Baghdad.

On Wednesday, militants from the Islamic State in Iraq and Syria, or ISIS, seized the northern cities of Mosul and Tikrit, which bruised stock prices by fueling fears U.S. recovery could suffer, especially if oil prices rise.

The U.S. said that it is working with Iraq's leaders on a coordinated response to regain lost territory.

Earlier Thursday, U.S. President Barack Obama said Iraq would need assistance from the U.S. to push the insurgents back.

Disappointing U.S. economic indicators dampened spirits on Wall Street as well.

The Commerce Department reported earlier that U.S. retail sales rose 0.3% in May, missing expectations for a 0.6% gain. However, retail sales for April were revised up to a 0.5% gain from a previously reported increase of 0.1%.

Core retail sales, which exclude automobile sales, eased up 0.1% in May, disappointing forecasts for a 0.2% increase. Core sales in April were revised up to 0.4% from a previously reported flat reading.

Separately, the Labor Department reported that the number of individuals filing for initial jobless benefits in the week ending June 7 increased by 4,000 to 317,000, confounding expectations for a decline of 3,000.

On Friday, the U.S. is to round up the week with data on producer price inflation and preliminary data on consumer sentiment from the University of Michigan.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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