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"The (Kurdish) peshmerga have withdrawn from Sinjar, Daash has entered the city," Kurdish official Kheiri Sinjari told AFP, using the former Arabic acronym for the IS.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"The peshmerga have withdrawn to mountain areas and are getting reinforcements," a high-ranking peshmerga source said.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.

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.

Facts on Iraq's Yazidi minority
Baghdad (AFP) Aug 03, 2014 - The Yazidi minority faces a struggle for survival in Iraq after their bastion Sinjar was taken over Sunday by Islamic State jihadists, forcing tens of thousands of people to flee.

The existence of the small Kurdish-speaking community on its ancestral land is now critically endangered. Here are a few facts about the Yazidis:

- The largest community is in Iraq -- 600,000 people according to the highest Yazidi estimates, but barely 100,000 according to others -- while a few thousand are also found in Syria, Turkey, Armenia and Georgia. They are mostly impoverished farmers and herders.

- They follow a faith born in Mesopotamia more than 4,000 years ago. It is rooted in Zoroastrianism but has over time blended in elements of Islam and Christianity. Yazidis pray to God three times a day facing the sun and worship his seven angels -- the most important of which is Melek Taus, or Peacock Angel.

- Yazidis discourage marriage outside the community and even across their caste system. Their unique beliefs and practices -- some are known to refrain from eating lettuce and wearing the colour blue -- have often been misconstrued as satanic. Orthodox Muslims consider the Peacock a demon figure and refer to Yazidis as devil-worshippers.

- As non-Arab and non-Muslim Iraqis, they have long been one of the country's most vulnerable minorities. Persecution under Saddam Hussein forced thousands of families to flee the country. Germany is home to the largest community abroad, with an estimated 40,000.

- Massive truck bombs almost entirely destroyed two small Yazidi villages in northern Iraq on August 14, 2007. More than 400 people died in the explosions, the single deadliest attack since the 2003 US-led invasion.

Five key battles on Iraq's scattered frontlines
Baghdad (AFP) Aug 01, 2014 - Jihadist fighters from the Islamic State (IS) group swept in from the northwest of Iraq and across much of the country's Sunni areas nearly two months ago.

The forces battling them and their motivations are diverse. Here is a snapshot of five flashpoints to watch across Iraq:

- BAIJI REFINERY

Where: 200 kilometres (125 miles) north of Baghdad

Who: Iraq special forces

Iraq's largest refinery, which at times was providing a third of its fuel, has been besieged by IS militants for weeks. Special forces tasked with defending the facility, which IS also sees as crucial to its own parallel economy, have looked isolated.

Fighting there led to a huge fire on Thursday but despite repeated attempts and claims by the jihadists, government forces have never completely lost control of the plant and were still holding out.

- AMERLI

Where: 160 kilometres (100 miles) north of Baghdad

Who: Turkmen fighters and government forces

The Turkmen town has been completely surrounded by IS fighters for six weeks, trapping thousands of civilians who have taken up arms to fight for their lives.

Residents say a humanitarian disaster is imminent in the town, which has been without power and drinking water for days. Some Shiite volunteers have joined army units who have so far stopped south of Amerli, unable to break the siege.

- JALAWLA

Where: 130 kilometres (80 miles) northeast of Baghdad

Who: Kurdish peshmerga

Jalawla is where the Kurds are being drawn into the conflict. It is one of the formerly contested areas the Kurdish peshmerga forces moved into when government troops fled in the face of the IS advance in June.

The town, south of the recognised autonomous Kurdish zone, has seen almost daily fighting in which the peshmerga have lost dozens of men. Cash constraints mean they have just managed to hold their positions but been unable to establish firm control.

- DHULUIYA

Where: 90 kilometres (55 miles) north of Baghdad

Who: Police and Sunni tribal fighters

Dhuluiya has been repeatedly attacked by IS fighters but one Sunni tribe has held out in the south of the town, which is essential for IS if it wants to progress towards Baghdad.

Fighting there has been fierce, notably because a destroyed bridge means there is no easy escape and because any surrender would likely lead to mass executions among Sunni tribes that once collaborated with the US army and now with the Shiite-led regime.

- JURF AL-SAKHR

Where: 50 kilometres (30 miles) southwest of Baghdad

Who: Government forces and Shiite militia

The small town nestled along the Euphrates has seen some of the most relentless fighting since the start of the IS offensive. Seventeen soldiers were killed there on Friday alone.

Using the IS-controlled city of Fallujah as a rear base, jihadists in Jurf al-Sakhr have battled pro-government forces keen to prevent a foray that would expose the nearby holy Shiite city of Karbala and further encircle Baghdad by cutting the main road to the south.