London - Global stock markets slid on Friday after the crash of a Malaysian Airlines jet which killed nearly 300 people over rebel-held eastern Ukraine, amid signs it was hit by a missile.
Russian shares and the ruble sank, as the disaster dramatically raised tensions between the Kremlin and the West.
The investment climate was already heavily clouded by broadened US and EU sanctions linked to Ukraine.
Sentiment was also rocked as Israel launched a ground invasion of Gaza, with tanks and warplanes sweeping into the area in a bid to stop rocket fire.
The heightened geopolitical tensions sent traders fleeing risky assets such as equities and into safer investments like gold, US bonds and the yen.
European equity markets, which had already fallen late on Thursday as news of the crash broke, extended losses in late morning Friday deals.
London's benchmark FTSE 100 sank 0.63 percent to 6,696.85 points, despite gains for drugmaker Shire Pharmaceuticals which agreed to a $54-billion takeover from US giant AbbVie.
Frankfurt's DAX 30 index shed 0.83 percent to 9,672.96 points and the Paris CAC 40 lost 0.37 percent to 4,300.13.
Milan stocks dropped 0.42 percent and Madrid decreased by 0.94 percent.
The euro meanwhile hit a February low against the safe-haven Japanese currency at 136.71 yen.
“Thursday's tragic Malaysian Airlines plane crash has spooked financial markets as tension increased between Russia, Ukraine and the West,” said Laith Khalaf, head of corporate research at brokerage Hargreaves Lansdown.
“Geopolitical tension was also elevated as Israel launched a ground offensive into Gaza.”
He added: “Investors fled shares for the perceived safe haven of US government bonds and gold, while the price of oil also climbed.”
Meanwhile, the IMF said that the Ukrainian economy was being unexpectedly badly damaged by the crisis, and said it now expected the economy to shrink by 6.5 percent this year instead of 5.0 percent.
In Paris, the head of the International Monetary Fund, Christine Lagarde, warned that European asset markets were perhaps too high relative to fundamental economic indicators, and also said that unduly low inflation could badly damage European growth.
In Asia, markets mostly fell after the disaster sparked geopolitical tensions.
Hong Kong dropped 0.28 percent, Tokyo sank 1.0 percent and Seoul slid 0.07 percent, while Sydney ended 0.17 percent higher.
Airline stocks in Asia retreated, led by a slump in already under-pressure Malaysia Airlines as the company faced up to its second major disaster in four months.
Shares in Malaysia Airlines tumbled by as much as 17.8 percent on the news, which comes months after Flight MH370 went missing with hundreds on board in a remote part of the Indian Ocean.
In Moscow, the ruble-denominated Micex stock index fell by 1.67
percent, and the dollar-based RTS index was down 2.23 percent.
The ruble meanwhile fell to 35.1 to the dollar and to 47.5 to the euro.
“The US and EU sanctions imposed on Russia had already been taking their toll on the Micex and the ruble before the incident involving flight MH17, but since the airliner was shot down Russia's currency and stocks have fallen still further,” ETX Capital analyst Daniel Sugarman told AFP.
The Boeing 777 came down in cornfields in the separatist-held region on Thursday, killing all 298 people on board, with the United States claiming it was shot down in a missile attack.
Washington demanded an “unimpeded” international inquiry into the tragedy and rejected Russian President Vladimir Putin's charge that Ukraine's crackdown on separatist rebels stoked tensions that led to the crash.
“Though the identity of the culprits has not conclusively been proven, Russia's role in the conflict as a whole has been focussed on,” added Sugarman.
“With the world's attention now firmly back on the Ukraine, markets will be keeping a close eye on subsequent developments.”
The airplane crash also sent Wall Street tumbling as the US Vice President Joe Biden said the jet had been apparently “blown out of the sky”, while officials said it had been hit by a surface-to-air missile.
The European single currency climbed to $1.3532, from $1.3525 late in New York on Thursday.
The British pound firmed to $1.7110 from $1.7100 on Thursday.
The euro eased to 79.08 pence from 79.09 pence.
In commodity deals, gold advanced to $1,310.20 per ounce from $1,302.50 on Thursday, when it had spiked by $20 at one stage following the plane crash. - Sapa-AFP