LONDON, July 18 (AFP): 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 per cent 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 per cent to 9,672.96 points and the Paris CAC 40 lost 0.37 per cent to 4,300.13. Milan stocks dropped 0.42 per cent and Madrid decreased by 0.94 per cent.
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 per cent this year instead of 5.0 per cent.
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 per cent, Tokyo sank 1.0 per cent and Seoul slid 0.07 per cent, while Sydney ended 0.17 per cent higher.
