Sulaimaniyah (Iraq) (AFP) - Jihadists raised their black flag in Iraq's northern town of Sinjar Sunday in a second straight day of advances against Kurdish forces, sparking mass displacement the UN called a humanitarian tragedy.

The Islamic State's capture of Sinjar raised fears for minority groups that had found refuge there and further blurs the border between the Syrian and Iraqi parts of the "caliphate" which the IS declared in June.

"The (Kurdish) peshmerga have withdrawn from Sinjar, Daash has entered the city," Kurdish official Kheiri Sinjari told AFP, using the former Arabic acronym for the IS.

"They have raised their flag above government buildings," the Patriotic Union of Kurdistan (PUK) party official said.

Other officials confirmed the fall of the town between the Syrian border and Mosul, which is Iraq's second city and has been the IS hub there since it launched a major onslaught on June 9.

"The peshmerga have withdrawn to mountain areas and are getting reinforcements," a high-ranking peshmerga source said.

Sinjar had sheltered thousands of people who were displaced by the IS offensive launched in the region nearly two months ago.

Among them are many of Iraq's minorities, such as Turkmen Shiites who fled the city of Tal Afar, about half-way between Sinjar and Mosul, when jihadist fighters swept in.

Sinjar is also a historical home for the Yazidis, a Kurdish-speaking minority that follows a pre-Islamic faith rooted in Zoroastrianism and has been repeatedly targeted.

- Fears for displaced -

"A humanitarian tragedy is unfolding in Sinjar," the top UN envoy in Iraq, Nickolay Mladenov, said.

Its capture prompted thousands of families -- up to 200,000 people, according to the UN -- to flee, many of them into the neighbouring mountains.

"The United Nations has grave concerns for the physical safety of these civilians," Mladenov said, as they risk being stranded with no supplies in roasting temperatures and surrounded by jihadists.

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UN chief Ban Ki-moon, in a statement, said he as "particularly appalled by the humanitarian crisis the actions by IS and associated armed groups have triggered".

He urged the Baghdad and Kurdish authorities "to put their differences aside and work closely together in addressing the urgent security needs of the nation, and adequately protecting and safeguarding the people and territorial integrity of Iraq".

A Kurdish official and several other sources also said IS fighters had destroyed the small Shiite shrine of Sayyeda Zeinab after taking control of Sinjar.

Sinjar in normal times had an estimated population of 310,000.

"Sinjar has emptied, there are not many people left apart from the 10,000 Sunnis there," said Abu Asaad, a 50-year-old merchant reached by phone as he fled to the Kurdish city of Dohuk with his wife and seven children.

"The world and the Iraqi government have to do something because some people -- including Yazidis and Christians -- have fled on foot and are now probably stuck in very dangerous areas," he said.

The jihadist group, which effectively controls much of Iraq's Sunni heartland, posted pictures on the Internet of its forces patrolling Sinjar's main street.

The push on Sinjar by IS fighters came a day after they seized Zumar, another town to the northeast, which had also been under peshmerga control.

The Sunni militants also seized two nearby small oilfields which a North Oil Company official said had a combined capacity of 20,000 barrels per day.

The IS advance raised concerns that the main dam north of Mosul could fall, but Kurdish sources said the peshmerga's elite Zerevani unit was still holding out.

Both Sinjar and Zumar are areas that the peshmerga moved into in June.

They filled a security vacuum left by retreating Iraqi government forces, while grabbing land the Kurds had long coveted and disputed with Baghdad.

The peshmerga are widely perceived as Iraq's best organised and most efficient military force, but the autonomous Kurdish region has been cash-strapped and its troops stretched.





- Political front -

On the political front in Baghdad, MPs in parliament's Shiite majority have until Friday, in principle, to pick their nominee for prime minister.

Incumbent Nuri al-Maliki seems intent on hanging on for a third term, but his support base, including within his own Dawa party, has crumbled since his coalition comfortably won April elections.

Many key domestic and international players in the ongoing conflict, which has killed thousands and displaced more than 600,000, have made it clear that any organised fightback against IS can start in earnest only if Maliki steps aside.