* Australian market at 3-1/2 week lows, bluechip stocks drag
* Oil bounces on risk to supplies, gold up on safe-havenappeal (Adds analysis, quotes, stocks on the move)
By Thuy Ong and Gyles Beckford
SYDNEY/WELLINGTON, June 13 (Reuters) - Australian sharesfell 0.9 percent on Friday to 3-1/2 week lows, dragged down bythe top 20 blue-chip stocks after Wall Street lost groundovernight on concerns about growing violence in Iraq.
Stocks were also pressured by disappointing U.S. retailsales and jobless claims data.
The S&P/ASX 200 index tumbled 44.9 points to 5,383.9by 0148 GMT, its biggest one-day percentage loss since May 19.The benchmark fell 0.5 percent on Thursday and looked set for aloss of 1.3 percent on the week.
All 'Big Four' banks lost ground, with Westpac Banking Corp losing 1.2 percent and Commonwealth Bank of Australia (Other OTC: CBAUF - news) down 0.6 percent to A$81.36. CBA had touched anall-time record high of A$82.68 earlier in the week.
U.S. President Barack Obama told reporters that he refusedto rule out U.S. action in Iraq against Sunni Islamist militantswho have surged out of the north toward Baghdad, threatening todivide the country and establish their own jihadist state.
Oil and gold shares bucked the downward trend as oil pricesjumped to nine-month highs and gold climbed 1 percent asfighting in Iraq intensified.
Among oil companies, Australia's top oil and gas producerWoodside Petroleum Ltd (Other OTC: WOPEF - news) climbed 1.8 percent, DrillsearchEnergy Ltd jumped 6.2 percent, while Santos Ltd added 0.9 percent.
Bullion miners Newcrest Mining Ltd and MedusaMining Ltd tacked on 2.2 percent and 4.1 percentrespectively.
"It's what's happening in Iraq and the U.S. directionovernight, the ASX is more or less in line with that", John Zhu,a portfolio manager at Triple 3 Partners (Other OTC: PGPHF - news) , an independentinvestment manager.
"Unrest in Iraq - people will be uneasy about that, it'sprobably a chance for investors to take a breather."
Whitehaven Coal Ltd scrambled 2.1 percent higherafter saying it would halt forest clearing at its Maules Creekmine after anti-coal activists sought court action to stop thework, but the coal mine's March 2015 deadline would not beimpacted.
Australian based gold miner Oceana Gold Ltd said the recent strong lift in share prices wasprobably because of higher gold prices. Shares were in a tradinghalt and the company last traded up 7.4 percent at NZ$3.35, a14-month high on the New Zealand index, while on the ASX, theywere up 8 percent to near 3-month highs of A$3.10.
The New Zealand stock market fell 0.5 percent in thinvolumes.
The benchmark NZX-50 index was at 5,169.09 points,but is virtually unchanged for the week.
Of the top stocks, Auckland International Airport Ltd was 2.2 percent lower, and software company Xero Ltd was down 1.9 percent.
(Reporting by Thuy Ong; Editing by Kim Coghill)
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