By Carla Mozee, MarketWatch

Oil companies lag

LONDON (MarketWatch) -- U.K. stocks dropped to a nearly four-month low Friday, underpinning losses for the week, during which investors wrestled with geopolitical tensions and signs of EU economic weakness.

The FTSE 100 index fell 0.5% to 6,563.19, on track for its lowest close since April 15, according to FactSet data. The FTSE also faced a 1.7% decline for the week, a second straight losing week.

Shares in oil companies fell, not getting any traction from the gain in oil prices (CLU4). Those gains came after U.S. President Barack Obama on Thursday authorized targeted airstrikes in northern Iraq, and after data showed China's oil imports rose in July.

The Pentagon said Friday airstrikes targeting Islamist militants in Iraq had begun.

Shares of oil major BP (BP) fell 0.8%, BG Group shed 2.4% and Royal Dutch Shell moved 1.1% lower.

U.K. and other European stocks this week were pulled lower as investors sought safety in bonds and other so-called safe-haven assets. The moves came as a trade war between Russia and the West escalated, with the action expected to hurt the euro-zone more than any other region.

Closer to home, the U.K.'s Office for National Statistics on Friday said the country's trade deficit widened in June to 9.4 billion pounds ($15.8 billion) as exports declined more rapidly than imports. The trade deficit grew with other members of the EU, but narrowed with countries outside of the currency union. The ONS also said construction output rose by 1.2% in June from May.

The construction-side gain "may prevent expectations of Q2 GDP revisions, but the deterioration of the trade balance underscores an economic headwind," said analysts at Brown Brothers Harriman in a note Friday.

The pound (GBPUSD) fell to $1.6805, extending losses from $1.6833 late Thursday.

Advancers on the FTSE 100 included miner Fresnillo PLC , which climbed 3.5%, and investment services firm Hargreaves Lansdown , up 3.3%.

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