Shares in leading Russian companies fell: airline Aeroflot shares fell 2.97pc after the company restricted some of its flights to Ukraine and Russian oil group Rosneft, one of the main targets of new sanctions against Russia over the crisis in Ukraine, lost a further 1.49pc.
Asian stock market also fell with the Nikkei closing down 1pc. Earlier on Wall Street the Dow fell 0.94pc from Wednesday's record close, while the S&P 500 sank 1.18pc and the Nasdaq was down 1.41pc.
The Nikkei's losses were triggered by the crash, said Hirokazu Kabeya, senior strategist at Daiwa Securities. He added that business was also hit by soft buying sentiment ahead of a three-day weekend in Japan.
He said: "We still don't know details of the incident but (market players) need to shun risks. Tensions had been simmering but they came to the fore again... (Investors) can't be so bold to push ahead with buying at the moment."
MH17 was carrying 298 people from Amsterdam to Kuala Lumpur when it crashed, with US officials saying it was shot down. The plane was lost in eastern Ukraine where government forces are engaged in a fierce battle to quell a rebellion by pro-Russian insurgents.
Shares in Malaysian Airlines dropped 9pc. "Sentiment was already negative, and this just makes it worse," an analyst with AmResearch told Reuters, referring to the mystery of Flight MH370 which went missing in March on a flight from Kuala Lumpur to Beijing with 239 passengers, many of them Chinese, and crew on board.
Safe-haven gold, which spiked on Thursday, fell back $5.78 to $1,313 on Friday and a flight into US Treasuries looks to have ease as the yield rose.
The VIX fear and greed index jumped more than 30pc on Thursday.
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