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World shares and the dollar tumbled on Friday and oil and gold jumped after U.S. President Barack Obama authorised targeted air strikes in Iraq, stoking fears of another drawn-out conflict in the region.
Fighting also resumed in Gaza between Palestinian militants and Israel while NATO's calls for Russia to "step back from the brink" of war in Ukraine were still ringing in ears of volatile markets.
"Earlier this week, one Iraqi in the area cried to the world, 'There is no one coming to help'," said Obama, who has been reluctant to go back into Iraq having withdrawn in 2011. "Well, today America is coming to help."
Global share markets had already been heading for a second week of straight losses but the latest developments sparked a fresh sell-off.
European stocks were down almost 1 percent by mid-morning after similar falls in Asian markets overnight. Futures markets pointed to a 0.5 percent drop for Wall Street when trading restarts.
"Risk aversion reigns, risk aversion rules," said Kit Juckes, Head of Currency Strategy at Societe Generale in London.
"The prospect of air strikes in northern Iraq on top of the tensions in Ukraine and Gaza ... across the board we have stocks weaker, bonds are stronger, the dollar is weaker and the yen is strongest of all."
Obama said in an address that he authorised "targeted" strikes to protect the besieged Yazidi minority and U.S. personnel in Iraq.
U.N. Secretary-General Ban Ki-moon and the United Nations Security Council also called for the international community to help Iraq's government and people as the country struggles against a sweeping advance by Islamist militants.
The intensifying risks in one of the world's big oil-producing countries delivered an immediate jolt to oil markets, sending U.S. crude up more than $1 to $98.45 a barrel and Brent to $106.39.
Brent spiked above $115 in mid-June on fears that violence in Iraq would disrupt oil supplies, but fell back as it become clear the fighting remains well away from the main oil fields in the south.
In late-night remarks