EDINBURGH, July 18 European stocks fell on
Friday, extending losses made late in the previous session after
a passenger plane was shot down over eastern Ukraine, fuelling
tensions between Russia and the West.
The pan-European FTSEurofirst 300 index was down by
0.5 percent at 1,356.29 by 0705 GMT after ending Thursday 1
percent lower following a sell-off in late trade sparked by
reports that the Malaysian airliner had crashed.
Airline stocks such as Deutsche Lufthansa and
Ryanair were 1.5 percent lower, as major travel
companies rerouted flights to avoid Ukranian airspace.
U.S. and Asian stocks fell sharply after a U.S. official
said Washington strongly suspected the Boeing 777 was downed by
a surface-to-air missile fired by Ukrainian separatists backed
by Moscow. All 298 people on board were killed.
The disaster could prove a turning point for international
pressure to resolve the crisis in Ukraine, which has killed
hundreds since protests toppled the Moscow-backed president in
Kiev in February and Russia annexed the Crimea a month later.
But uncertainty over how the incident will affect the
conflict between the Ukrainian government and separatists could
mean investors are reluctant to hold long positions.
"While the market response to the unfortunate air incident
was not as bad as many might have expected, with this being
week-end and geopolitical risk such an unknown quantity, be
prepared for some risk aversion," Mike van Dulken, head of
research at Accendo Markets, said in a note.
(Reporting by Alistair Smout; Editing by Catherine Evans)