Wall Street's drop, Iraq shake world markets

Hong Kong • World stock markets slumped Wednesday after Wall Street's biggest decline in two weeks and ongoing violence in Iraq dampened sentiment.

Asian and European investors took their lead from Wall Street, where U.S. blue-chip bank and energy stocks led a sell-off in the final hour of the trading session. A report that new U.S. home sales rose in May to the highest in six years helped homebuilders, but wasn't enough to lift the broader market.

Investors were also prompted to cash in their gains after fresh reports of violence in Iraq, including unconfirmed airstrikes by Syrian warplanes, that raised fears that the conflict could spiral into a broader regional conflict.

"Fresh geopolitical concerns in Iraq may have given investors the perfect excuse to take profits off the table," said Desmond Chua, market analyst at CMC Markets in Singapore.

In early European trading, France's CAC 40 slipped 0.6 percent to 4,490.13 while Germany's DAX dropped 0.6 percent to 9,883.62. The FTSE 100 index of leading British companies lost 0.6 percent to0 6,747.40.

U.S. stocks were poised for a flat open, with Dow futures down less than 0.1 percent to 16,742.00 while broader S&P 500 futures were practically unchanged at 1,942.70.

Japan's Nikkei 225 slipped 0.7 percent to close at 15,266.61 while South Korea's Kospi dropped 0.6 percent to end at 1,981.77.

Hong Kong's Hang Seng wavered beween gains and losses before closing less than 0.1 percent lower at 22,866.70 while in mainland China the Shanghai Composite Index lost 0.4 percent to 2,025.50. Australia's S&P/ASX 200 fell 0.6 percent to 5,402.00.

In energy trading, the price of U.S. benchmark crude for August delivery rose 21 cents to $106.24 per barrel in electronic trading on the New York Mercantile Exchange. The contract dropped 14 cents to $106.17 on Tuesday.

In currencies, the dollar slipped to 101.92 Japanese yen from 101.94 in late trading Monday. The euro rose to $1.3607 from $1.3604.