GLOBAL MARKETS-Iraq unrest drives up oil, dollar; shares flat

Fri Jun 13, 2014 1:21pm EDT

(Adds close of European bond, stock markets)
    * Iraq fighting boosts oil, weighs on global equity averages
    * Dollar rises slightly on Iraq conflict, higher U.S. yields

    By David Gaffen and Herbert Lash
    NEW YORK, June 13 (Reuters) - Escalating violence in Iraq
drove crude oil and the dollar higher on Friday while damping
the appetite for global equity markets, even as bullish news
from the U.S. tech sector lifted stocks on Wall Street.
    Brent crude edged above $113 a barrel, up more than $4 this
week, on concerns that an insurgency in Iraq could trigger civil
war and eventually crimp oil exports.
    Iraq's most senior Shi'ite cleric urged his followers to
take up arms to defend themselves against the advancing Sunni
militants, potentially escalating the conflict. 
    "The market in general is trying to assess the risks on
Iraq. There was a big market reaction and then the IEA
(International Energy Agency) said it did not see a risk to
supplies so the volatility is reflecting this," said Olivier
Jakob at Petromatrix consultancy.    
    The dollar strengthened against a basket of major currencies
for the first time in three sessions as Iraqi violence triggered
a safety bid for the U.S. currency. Higher U.S. bond yields also
 underpinned the move. 
    European stocks closed slightly lower but shares on Wall
Street rose after Intel Corp raised its full-year
revenue outlook, citing stronger-than-expected demand for
personal computers used by businesses. 
    Intel added the most gains to the three major indices on
Wall Street, and its shares were up 6.9 percent at $29.89.
    MSCI's all-country world equity index 
slipped 0.02 percent, and was down 0.7 percent for the week.
    The FTSEurofirst 300 index of top European shares
closed down 0.2 percent at 1,389.83, moving further away from
this week's 6-1/2-year high.
    The Dow Jones industrial average added 11.85 points,
or 0.07 percent, at 16,746.04. The Standard & Poor's 500 Index
 was up 2.69 points, or 0.14 percent, at 1,932.80. The
Nasdaq Composite Index was up 6.74 points, or 0.16
percent, at 4,304.37. 
    "The market isn't cheap, but it isn't crazy expensive and
the sectors that are looking better are cyclical in nature,"
said Michael Mullaney, chief investment officer at Fiduciary
Trust Co in Boston. "Tech has been doing well from a price
return standpoint, and that should continue." 
    Brent was up 24 cents at $113.26 per barrel, off a
peak of $114.69, its highest since September.
    U.S. crude was up 40 cents at $106.93, off a high of
$107.68, also a nine-month peak.
    The U.S. dollar index, which measures the dollar
against a basket of six major currencies, rose 0.08 percent at
80.657. The euro slid 0.15 percent against the dollar at
$1.3530, while the dollar rose 0.3 percent against the yen
 at 102.01.
    Despite the decline in riskier assets, benchmark U.S. bond
prices fell, pushing yields slightly higher. Sterling surged on
Friday after the Bank of England hinted at an interest rate rise
this year. 
    Benchmark U.S. 10-year notes fell 6/32 in price
to yield 2.606 percent.

 (Additional reporting by Anirban Nag, Julia Payne and
Christopher Johnson; Editing by Nick Zieminski and Dan Grebler)
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