LONDON ( The Deal) -- European stocks declined on Friday, ignoring the positive impetus from major Asian markets, as oil prices surged amid escalating violence in Iraq which threatened to disrupt production and erupt into another full-scale war.
Sunni fighters calling themselves Islamic State of Iraq in the Levant, an Al-Qaeda splinter group, advanced both in the north of the country, near the Kurdish-dominated oil producing region, and toward Baghdad in central Iraq. Amid pressure from Republicans in Congress, President Obama said he's looking at all options to help Iraq's Shia government and didn't rule out air strikes.
In London, the FTSE was down 0.45% at 6,812.56. In Frankfurt, the DAX slipped 0.49% to 9,889.90 and in Paris, the CAC 40 fell 0.35% to 4,538.46. Brent crude oil for July settlement was up 0.54% at $113.63 per barrel by mid-morning in London, having risen to nine-month highs on Thursday.
But the prospect of a sustained period of higher fuel prices weighed heavily on airlines, with International Consolidated Airlines Group and Easyjet Group in London, Deutsche Lufthansa in Germany, and Air France in Paris all down sharply.
In the U.K., homebuilders including Barratt Developments, Taylor Wimpey and Crest Nicholson Holdings plunged after Chancellor of the Exchequer George Osborne promised the Bank of England new powers to curb risky mortgages and therefore calm the housing market.