* Shares cut losses, Bunds pare gains as Iraq concerns settle * U.S. stock futures turn positive, Treasury yields near 14-month low * Oil trims gains, gold near highest since July 18 By Marc Jones LONDON, Aug 8 (Reuters) - World shares and the dollar fell on Friday and oil and gold rose after President Barack Obama authorised targeted air strikes in Iraq, stoking fears of another drawn-out conflict in the region.
Fighting also resumed in Gaza between Palestinian militants and Israel while NATO's calls for Russia to "step back from the brink" of war in Ukraine were still ringing in ears of volatile markets.
"Earlier this week, one Iraqi in the area cried to the world, 'There is no one coming to help'," said Obama, who has been reluctant to go back into Iraq having withdrawn in 2011. "Well, today America is coming to help." Global share markets had already been heading for a second week of straight losses but the latest developments sparked a fresh sell-off.
European stocks fell more than 1 percent after similar falls in Asia though they had begun to claw back ground as the start of U.S. trading neared.
"We still don't know what's going to happen (in Iraq and Ukraine), so maybe things moved a little bit too fast this morning," said Rabobank strategist Emile Cardon.
"For now at least there isn't anymore bad news, but it's still very uncertain and I'm not sure how long this is going to last." Having pointed south for much of the day, Wall Street stock futures had turned around to signalled opening gains of 0.2-0.3 percent for U.S. markets.
Germany's Dax index, Paris's CAC and markets in Italy and Spain had got themselves back level or higher by 1215 GMT leaving only the FTSE in London in the red, as demand for safe-haven bonds also cooled.
Obama said in an address that he authorised "targeted" strikes to protect the besieged Yazidi minority and U.S. personnel in Iraq, while Secretary Of State John Kerry said on Friday the stakes for Iraq couldn't be clearer.
He added the sweeping advance by Islamist militants showed "all the warning signs of genocide" and came after Thursday's call from U.N. Secretary-General Ban Ki-moon for the international community to help Iraq's government and people.
OIL PRESSURE The intensifying risks in one of the world's big oil-producing countries delivered an immediate jolt to oil markets, sending U.S. crude up more than $1 to $98.45 a barrel and Brent to $106.39 before both trimmed down gains.
Brent spiked above $115 in mid-June on fears that violence in Iraq would disrupt oil supplies, but fell back as it become clear the fighting remains well away from the main oil fields in the south.
In late-night remarks televised from the White House, Obama insisted he would not commit ground forces and had no intention of letting the United States "get dragged into fighting another war in Iraq." But markets were pondering the possibility of just that.
The dollar was off its lows but remained 0.2 percent down having hit two-week trough of 101.68 against the safe-haven Japanese yen.
Yields on 10-year Treasuries and German Bunds - global investors' tradition go-to assets in times of tension - also nudged back up have dropped as low 2.375 and 1.026 percent respectively.
Events in Iraq and the economic sanctions and tensions over Ukraine have "an impact on confidence and this is what you have to watch," said Didier Duret, chief investment officer at ABN Amro, adding a big rise in tensions could even force the Federal Reserve to hold off from raising interest rates.
RUSSIAN BOUNCE Stronger-than-expected export growth from China did little to offset the broader sense of nervousness.
Gold, another safe haven, hit $1,318.80 an ounce, its highest since July 18 as headed for a weekly rise of almost 2 percent. The yen is also up and German Bund yields have hit a string of record lows this week.
Offering perhaps one of the biggest signals yet of a growing wariness over risk assets, Lipper data on Thursday showed investors pulled a record $7.1 billion from U.S.-based junk bond funds over the last week and bailed out of equity exchange-traded funds at the fastest pace in six months.
"It seems only a short time ago that traders were talking corrections, but now it seems only a matter of time before we see technical bear markets" in some assets, IG chief market strategist Chris Weston wrote in a note to clients.
Among the few markets to put of positive spins on the Iraq situation were Russian stocks, up for the first time in seven sessions, albeit firmly on course for a fourth week of back-to-back falls.
The rouble, however, was hovering at a four and half month low against the dollar and the cost of insuring against a Russian debt default rose to a three-month high on concerns about the potentially escalating sanctions tussle with the West.
(Reporting by Marc Jones; Editing by Toby Chopra/Ruth Pitchford)