4:56pm: Shares posted their biggest weekly drop since  the start of February after insurgent attacks on oil fields in northern Iraq led to talk of war from the President of the United    States and the Prime Minister of Australia. The escalation in geopolitical risk  added to the pressure on the local equity market following a slump in  the spot price of Australia’s biggest export, iron ore.

The benchmark S&P/ASX 200 Index and the All  Ordinaries Index both lost 1.1 per cent over the past week to two-month  lows of 5405.1 points and 5383.7 points, respectively. Losses were broad-based  with the exception of energy and gold stocks, which benefited from investor risk  aversion and higher oil prices.

Despite fears of another gulf war brewing, Wilson Asset Management chief  investment officer Chris Stottsaid it would not alter his strategy. “Indeed, as  investors ditch assets traditionally considered risky, such as mining stocks, it  could present a buying opportunity,” he said.

Mining was the worst-performing sector for the week, down  2.6 per cent, as the spot price for iron ore, landed in China, lost another 2.8  per cent to its lowest value since September 2012 at $US91.50 a tonne.

Resources giant BHP Billiton lost 2.6 per cent over the five  trading sesssions to $35.29 despite analysts roundly endorsing management for  showing discipline in announcing more cuts to struggling projects.

Main rival Rio Tinto fell 3 per cent to $57.60, while iron  ore miner Fortescue Metals Group crashed 10.2 per cent to  $4.06.

Smaller iron ore miners with higher production costs were hit much harder. BC Iron was the worst-performing stock in the ASX 200, down  15.7 per cent at $3.06.

Engineering services contractor Downer EDI dropped 13.3 per  cent to $4.55 after BHP Billiton cancelled a $360 million coalmine contract.

Gold miners got a boost with equity strategists expecting  the precious metal to surge in value if the political conflict in Iraq  escalates. The spot price for gold strengthened 1.5 per cent over the week to  $US1272.15 per ounce.

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4:45pm: And here are the best and worst performing  stocks in the top 200 today.

Energy names feature heavily in the best performers after  the oil price spiked overnight, while iron ore miners went the  other way.

Aquila Resources was the worst performer, down 12.4 per cent  after China Baosteel Group said it wouldn't increase its $3.40 takeover offer.  Aquila shares closed at $3.10.

Best and worst performing stocks in the ASX 200 today.

4:30pm: Shares staged a rally from their late morning  lows, climbing steadily higher into the afternoon as bank  shares pared their losses and regional markets enjoyed a strong  bounce.

It wasn't enough to negate the steep early fall, with the ASX 200 and  All Ords closing 0.4 per cent, or 24 points, lower to 5405.1 and  5383.7, respectively.

Mining stocks were the biggest drag on the market as iron  ore touched 21-month lows, falling 1.3 per cent as a group. BHP led the drop, down 1.2 per cent, while Rio shed 1.9  per cent and Fortescue 6.2 per cent.

Gold miners were the exception, jumping 2.9 per cent, while energy stocks enjoyed the surging oil price, adding 1.3 per  cent.

4:01pm:China’s stocks are higher, sending the  benchmark index to a six-week high, after new bank  lending topped estimates and industrial production growth  accelerated.

The Shanghai Composite is up 0.8 percent, the highest since  April 22. The index has advanced 2 per cent this week, poised for the biggest  weekly gain in two months, after the central bank cut the reserve-requirement  ratio for some lenders. That has fuelled speculation the government may announce measures to support the economy.

“The market has expectations about further loosening of monetary  policies and that’ll attract some buying sentiment,” said Wang Zheng,  chief investment officer at Jingxi Investment Management Co. “The economic data  have no surprise. It’s showing the economy is stabilising.”

Other Asian markets also rallied, with Japan’s Nikkei 0.9  per cent higher after the Bank of Japan confirmed no change to monetary policy,  and Hong Kong’s Hang Seng jumped 0.8 per cent in afternoon  trade.

Korea’s KOSPI fell 1 per cent, and Taiwan’s  TAIEX 0.1 per cent.

Chinese industrial output rose 8.8 percent in May from a  year earlier, in line with estimates, and retail sales gained 12.5 percent, the  National Bureau of Statistics said on its website today.

Fixed-asset investment excluding rural households increased  17.2 percent in the first five months of the year, the agency said.

Local-currency loans were 870.8 billion yuan ($140 billion),  the People’s Bank of China said yesterday, higher than 42 out of 43 analyst  estimates in a Bloomberg News survey. M2, the broadest measure of money  supply, rose 13.4 percent, compared with a median projection for 13.1  percent.

Citigroup Inc. said in a report dated yesterday that it has an overweight allocations on Chinese stocks for the “first time in  years” amid signs the economy is bottoming  out.