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Europe stocks close slightly lower; Iraq eyed

European shares closed slightly lower on Friday, extending losses, amid concerns of escalating tensions in Iraq and rising oil prices.

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Iraq escalates

The pan-European FTSEurofirst 300 closed provisionally down around 0.1 percent at 1,390.81, with most major European bourses in the red.

It came after U.S. president Barack Obama warned of possible military strikes in Iraq as a rebellion led by a Sunni Islamist group called the Islamic State of Iraq spread through the country.

On Friday, heavily armed Islamist militants flush with $450 million in stolen cash pushed toward Baghdad, according to NBC News, sending thousands fleeing in fear from the Iraqi capital.

Read MoreBoE'sCarney: Rates could rise sooner than expected

Crude spiked on concern of supply disruptions and the Wall Street Journal reported that Iran was sending elite troops to help the Iraqi government fight the rebellion.

Read MoreIran open to shared role with US in Iraq

Carney sends sterling higher

Meanwhile, the U.K. Bank of England Governor Mark Carney said late Thursday that interest rates in the country could rise sooner than investors expect – a surprisingly strong comment that sent sterling soaring.

Read MoreOil spike fears rise as stability in Iraq unravels

"There's already great speculation about the exact timing of the first rate hike and this decision is becoming more balanced," Carney said at the annual Mansion House speech. "It could happen sooner than markets currently expect."

On the data front, construction data for the U.K. was revised upwards on Friday. The reading showed a 1.5 percent uptick for the first quarter, better than a previous number of 0.6 percent, and suggested Britain's gross domestic product number could also be revised higher.

A May consumer price index for Italy showed a monthly dip of 0.1 percent, which met estimates. A final reading for inflation for the same country showed the same reading, as did Germany's final figure.

In the U.S., stocks opened little changed on Friday. Benchmark indexes were on track for weekly losses, after data illustrated and the impact of Iraq on oil prices.

Airlines suffer

In individual stocks news, shares of oil companies were up on Friday, as the price of the commodity moved higher. Total, Shell and BP all ended the day with modest gains.

Airline stocks moved in the opposite direction on tensions in Iraq. Lufthansa, Air France and Ryanair all closed down slightly.

U.K. homebuilders ended the day lower, after Carney's speech focused on cooling the nation's housing market. Shares of Barratt Development closed down by around 6.1 percent, with Persimmon Homes' easing 6.9 percent.

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