Asian stocks were mostly lower on Friday after the U.S. authorized targeted airstrikes on Iraq but robust trade data from China helped to pare losses.
Speaking at a press conference, U.S. president Barack Obama said he authorized the U.S. military to make targeted airstrikes in Iraq to protect American personnel. His remarks came as the U.S. began an effort to drop humanitarian aid to Iraqi civilians in the northwest of the country.
"Short-term volatility has come alive today, with investors hedging and adopting a 'return of equity' mentality. I would personally hold off from accumulating just yet until clarity is restored, although those who subscribe to the mantra 'buy when fear is high' would look at this market with great interest," said Chris Weston, chief market strategist at IG, in a note.
Meanwhile, the world's second-largest economy saw exports surge 14.5 percent on year, blowing past expectations for a 7.5 percent rise, while the surplus rose to $47.3 billion, compared to forecasts for $27 billion.
Nikkei 3% lower
Japan's benchmark Nikkei index fell to its lowest level since May 30 while the safe-haven yen strengthened to a two-week high after data showed the economy's June current account logged a deficit for the first time in five months.
As expected, the Bank of Japan left monetary policy steady and offered a gloomier outlook for exports and industrial output. Focus now turns to Governor Haruhiko Kuroda's press conference later in the day.
In earnings news, Japan Display slumped 7 percent after posting a wider-than-expected loss for the April-June period while SoftBank fell 3.4 percent ahead of reporting results after the market close.
Kospi skids 1.1%
South Korean shares fell to a two-week low, weighed down by automakers following a report in the Korea Times that carmakers could be hurt if Seoul joints the West in imposing sanctions on Russia.
Shanghai up 0.3%
Mainland shares bucked Asia-wide losses thanks to July's upbeat trade data. The benchmark index rebounded after hitting a new one-week low earlier in the session.
ASX down 1.2%
Australia's benchmark index ended at a new one-month low, extending losses into a sixth day, while the Australian dollar fell to a new two-month low after the Reserve Bank of Australia reiterated a period of low interest rates in its quarterly statement.
Steep falls among miners weighed on the index. Fortescue Metals closed down 3.4 percent and BHP Billiton 1.8 percent lower. Rio Tinto rose 0.2 percent despite announcing on Thursday that first-half profits rose 21 percent, beating expectations.
Emerging markets lower
Stocks in Malaysia and the Philippine shares closed down more than 1 percent each while India's Nifty index also finished 1 percent lower and the weakened to a five-month low against the greenback.