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Russian President Putin blames Malaysian plane tragedy on Ukraine

A Malaysia Airlines passenger plane carrying 298 people was hit by a surface-to-air missile on Thursday, said U.S. intelligence officials. Officials were divided over the origin of the missile that hit the plane, which crashed over eastern Ukraine.

U.S. Vice President Joe Biden said the plane crash was "not an accident," adding that it was "blown out of the sky."

Both the Ukrainian government and the pro-Russia separatists fighting in the region denied any responsibility for downing the aircraft.

Russian President Vladimir Putin said Ukraine bore responsibility for the downing of the plane, saying it would not have happened if Kiev had not resumed a military campaign against separatists.

Malaysia Airlines said Ukrainian aviation authorities told the company they had lost contact with Flight MH17, a Boeing 777 from Amsterdam, about 30 kilometers (20 miles) from Tamak waypoint, which is 50 kilometers (30 miles) from the Russia-Ukraine border.

As huge plumes of black smoke rose up near a village in eastern Ukraine, the fate of the plane's passengers wasn't immediately known. An AP journalist counted at least 22 bodies at the wreckage site while Reuters reported that all 295 people aboard had died.

Ukrainian President Petro Poroshenko said his country's armed forces did not take action against any airborne targets. "We do not exclude that this plane was shot down, and we stress that the armed forces of Ukraine did not take action against any airborne targets," he said. "We are sure that those who are guilty in this tragedy will be held responsible."

The country's state security chief accused two Russian military intelligence officers of involvement in the Malaysian airline crash, basing his allegation on phone interception. He added the officers must be punished for this "crime."

Read MoreStocks drop on reports plane shot down over Ukraine

But Russian separatists blamed the downing of the plane on the Ukrainian government, according to Russian media.

Emergencies Ministry members gather at the site of a Malaysia Airlines Boeing 777 plane crash near the settlement of Grabovo in the Donetsk region, July 17, 2014.
Reuters
Emergencies Ministry members gather at the site of a Malaysia Airlines Boeing 777 plane crash near the settlement of Grabovo in the Donetsk region, July 17, 2014.

"Apparently, it's a passenger airliner indeed, truly shot down by the Ukrainian Air Force,'' separatist leader Alexander Borodai told Russia's state-run Rossiya 24 TV broadcaster.

(For updates from verified social media accounts about the situation, scroll to this article's bottom.)

Another separatist, Andrei Purgin, told The Associated Press that he was certain that Ukrainian troops had shot the plane down but gave no explanation or proof.

Read MoreUkraine air space still open; but airlines avoid

Purgin said he did not know whether rebel forces owned Buk missile launchers, but said even if they did, there had no fighters capable of operating it.

There were unconfirmed reports that the crashed plane's flight recorder (the so-called black box) had been located.

U.S. President Barack Obama emphasized in a phone call with Poroshenko that all evidence from the crash site must remain in place until international investigators are able to examine all aspects of the tragedy. Meanwhile, UN Chief Ban Ki-Moon urged a "full and transparent international investigation" into the crash.

Pro-Russian separatists said they would have up to a three-day ceasefire in Eastern Ukraine to allow for recovery work at the site of the downed airliner, according to a RIA news agency.

Earlier, Obama said the U.S. is trying to determine if U.S. citizens were on board the crashed plane following reports that U.S. citizens were on board the plane.

Malaysia Airlines senior vice president Huib Gorter said there were at least 154 Dutch, 27 Australians, 23 Malaysians, 11 Indonesians, six Britons, four Germans, four Belgians, three Phillippinos and one Canadian aboard the Boeing 777 jet.

There were a further 47 passengers whose nationality was not yet known. All the 15 flight crew were Malaysian.

Calling the downed plane a "terrible tragedy," Obama said the U.S. will offer any help it can to determine what happened and why.

In a phone conversion, Putin told Obama that a Malaysian jetliner crashed on Ukrainian territory, the Kremlin said. The two leaders held a already planned call on the situation in Ukraine following expanded sanctions on Russia during which information became available from air traffic controllers about the plane.

Read MoreObama warns Putin of more sanctions over Ukraine

Ukraine's prime minister identified the shot-down plane as a missing Malaysian Airlines flight and has ordered an investigation. A YouTube video purported to show footage from moments after the plane went down.

Malaysian Prime Minister Najib Razak said he was shocked by the reports and was also planning an investigation.

On his Facebook page, Ukraine's minister of internal affairs, Anton Gerashchenko, claimed that terrorists struck down the plane under Putin's orders.

Putin expressed his condolences to the Malaysian Prime Minister following the passenger plane crash.

In a CNBC interview, retired U.S. Gen. Barry McCaffrey said, "This was a major strike, a deliberate strike to get an aircraft at that altitude."

Read MoreCondemnation of Russia bad and likely to get worse

Retired Col. Ken Allard told CNBC, "To bring down an airliner from 33,000 feet you need a good air defense weapon, not just a missile itself and also the radar. That says Russian, and that says to me either a separatist element or the Russians themselves."

Boeing said it is aware of media reports and is gathering more information on the situation.


Stocks sold off as investors moved into the safety of bonds and gold while awaiting more details on how a Malaysian Airline jet crashed in Ukraine. Stocks had been languishing ahead of the first batch of headlines about the crash crossed in the 11 a.m. hour. The Dow temporarily dipped more than 90 points as news wires confirmed an Interfax report that said the plane was shot down.

Following confirmation that Israeli had launched a ground operation in the Gaza Strip, equities closed sharply lower.

Israel launches ground offensive in Gaza: PM

Gold, under selling pressure this week, settled 1.3 percent higher at $1,316 per troy ounce, and wheat, a major crop of Ukraine, jumped more than 2 percent on the CME. The yen gained further ground against other currencies, as the dollar slid with Treasury yields. The 10-year note yield fell to 2.46 percent from 2.50 earlier.

Wells Fargo Advisors strategist Scott Wren said the reaction in stocks was natural, and he has been saying the biggest risk to stocks this summer is event risk, not the U.S. economy.

"The markets need clarity on just what happened," said Wren in a quick email. "Uncertainly over an event (cause, etc) usually results in markets trading down……traders taking a little money off the table and waiting to see what happened."

The region has seen severe fighting between Ukrainian forces and pro-Russia separatist rebels in recent days.

On Wednesday evening, a Ukrainian fighter jet was shot down by an air-to-air missile from a Russian plane, Ukrainian authorities said Thursday, adding to what Kiev says is mounting evidence that Moscow is directly supporting the separatist insurgents in eastern Ukraine. Security Council spokesman Andrei Lysenko said the pilot of the Sukhoi-25 jet hit by the air-to-air missile was forced to bail after his jet was shot down.

Pro-Russia rebels, meanwhile, claimed responsibility for strikes Wednesday on two Ukrainian Sukhoi-25 jets. The Ukrainian Defense Ministry said the second jet was hit by a portable surface-to-air missile, but added the pilot was unscathed and managed to land his plane safely.

—CNBC.com with wires

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