Channel NewsAsia

US stocks tumble on Malaysia Airlines crash

US stocks tumbled on Thursday after a Malaysian airliner crashed in rebel-held eastern Ukraine, with Kiev saying it was shot down, heightening tensions in the months-old conflict and shaking markets.

NEW YORK: US stocks tumbled on Thursday after a Malaysian airliner crashed in rebel-held eastern Ukraine, with Kiev saying it was shot down, heightening tensions in the months-old conflict and shaking markets.

The Dow Jones Industrial Average sank 161.39 points (0.94 per cent) to 16,976.81, retreating from Wednesday's record close.

The broad-based S&P 500 plummeted 23.45 points (1.18 per cent) to 1,958.12, while the tech-rich Nasdaq Composite Index lost 62.52 points (1.41 per cent) at 4,363.45.

"Obviously it's all about the tragedy in Ukraine," said Peter Cardillo, chief market economist at Rockwell Global Capital. "This raises the level of the fear factor regarding geopolitical concerns."

There were no signs of survivors from the crash of Malaysia Airlines Boeing 777, which was carrying 298 people from Amsterdam to Kuala Lumpur.

Ukraine President Petro Poroshenko said he could not rule out that the plane was shot down. Poroshenko's official spokesman said he believed pro-Russia insurgents downed the jet.

"This incident is not a catastrophe. It is a terrorist act," Poroshenko's spokesman posted on Twitter.

The disaster sparked a stampede of money away from stocks and towards safer assets, such as gold (+1.4 per cent) and US Treasuries, with bond prices rising.

The yield on the 10-year US Treasury fell to 2.47 per cent from 2.54 per cent Wednesday, while the 30-year dropped to 3.29 per cent from 3.35 per cent. Bond prices and yields move inversely.

European equity markets also retreated, with the British FTSE-100 losing 0.7 per cent, the French CAC-40 dropping 1.2 per cent, and the German DAX giving up 1.1 per cent.

The plane crash in rebel-held eastern Ukraine comes at a sensitive moment in a regional crisis that has stoked tensions between Russia and the West.

On Wednesday, the US and the European Union strengthened sanctions on Moscow, with President Barack Obama criticizing Russia for its "continued provocations in Ukraine."

Russia angrily denounced the sanctions.

The plane crash is "really bad news, much more serious than the sanctions announced yesterday by Washington," said Gregori Volokhine, president of Meeschaert Capital Markets.

"Air travel is very important for the economy," he added. "This is very destabilizing for travelers and investors."

Delta Air Lines dropped 3.4 per cent as it said it would no longer send flights through Ukrainian airspace.

American Airlines (-4.1 per cent) and United Continental (-3.5 per cent) also fell. Dow component Boeing dropped 1.2 per cent.

The plane crash overshadowed a busy day of corporate earnings. Investment bank Morgan Stanley dipped 0.6 per cent despite beating expectations by a wide margin, while toymaker Mattel slumped 6.6 per cent as profits sank percent due in part to a big drop in sales of the iconic Barbie doll.

Tweet photos, videos and updates on this story to  @channelnewsasia