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Asian shares hit by news of Ukraine air tragedy

Asian markets took a hit on Friday after a Malaysia Airlines jet came down in battle-wracked Ukraine, sparking geopolitical tensions and sending Wall Street tumbling as the US claimed it had been shot down.

HONG KONG: Asian markets took a hit on Friday after a Malaysia Airlines jet came down in battle-wracked Ukraine, sparking geopolitical tensions and sending Wall Street tumbling as the US claimed it had been shot down.

Airline stocks retreated, led by a slump in already under-pressure Malaysia Airlines, as news filtered through that almost 300 people had died in the tragedy.

Tokyo tumbled 1.16 per cent in the afternoon, Hong Kong shed 0.60 per cent, Sydney lost 0.11 per cent and Seoul was 0.32 per cent lower. However, Shanghai was up 0.40 per cent after an early sell-off.

While regional markets are broadly lower -- with an Israeli ground offensive in Gaza adding to tensions -- they are off their early lows.

MH17 was carrying 298 people from Amsterdam to Kuala Lumpur when it crashed in eastern Ukraine. US Vice President Joe Biden said the jet had been "blown out of the sky", while officials said it had been hit by a surface-to-air missile.

Ukraine's government described the incident as a "terrorist act", while comments attributed to a pro-Russia rebel chief suggested his men may have downed it by mistake, believing it was a Ukrainian army transport plane.

However, Russian President Vladimir Putin said Ukraine bore responsibility for the crash, which came as Ukrainian forces battle pro-Moscow insurgents in the east of the country. The UN Security Council has called an emergency session on Friday to discuss the disaster.

The market plunge was triggered by "nothing but the crash", said Hirokazu Kabeya, senior strategist at Daiwa Securities.

"We still don't know details of the incident but need to shun risks," he said, adding the market would continue to be weighed down as investors watch developments. "Tensions had been simmering but they came to the fore again... (Investors) can't be so bold to push ahead with buying at this moment."

Shares in Malaysia Airlines tumbled 17.8 per cent at one point on the news, which comes months after Flight MH370 went missing with hundreds on board in a remote part of the Indian Ocean.

Combined with the airline's perennial losses, the MH370 debacle has pummelled its shares this year -- it has lost more than a third of its value since January 1 -- and sparked speculation over whether it may be sold off or restructured.

Friday's stock market sell-off affected other airlines, with Japan's Japan Airlines losing 0.83 per cent and ANA 1.20 per cent lower, while Hong Kong's Cathay Pacific lost 1.40 per cent.

On Wall Street, the Dow fell 0.94 per cent from Wednesday's record close, while the S&P 500 sank 1.18 per cent and the Nasdaq was down 1.41 per cent.

The dollar took a hit Thursday in New York as traders moved into the yen, which is considered a safe hedge bet during times of political and economic uncertainty.

On Friday in Asia, it recovered a touch to sit at 101.32 yen, a tad up from 101.17 yen in New York but still well down from 101.51 yen in Tokyo earlier Thursday.

The yen's initial advances against the euro also subsided. The single currency bought 137.08 yen in Tokyo afternoon trade after sinking to 136.72 yen earlier in the day.

The euro was flat at $1.3525. The dollar was also buying 3.196 Malaysian ringgit, up from 3.175 ringgit on Thursday.

On oil markets, US benchmark West Texas Intermediate for August delivery was up 46 cents in morning trade at $103.65 a barrel and Brent crude for September advanced 35 cents to $108.24.

Gold, also a safe haven, jumped to $1,313.40 by 0500 GMT compared with $1,302.90 late Thursday.

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