US State Department says US embassy in Kiev in contact with Ukrainian authorities about crash

A Ukrainian official said a passenger plane carrying 295 people was shot down Thursday as it flew over the country and plumes of black smoke rose up near a rebel-held village in eastern Ukraine.

Separately, Malaysia Airlines confirmed that it lost contact with flight MH17, which was carrying 295 people, about 30 miles from the Russian-Ukraine border.

Both the Ukrainian government and the pro-Russia separatists it is fighting in the region denied shooting down any plane. As huge plumes of black smoke rose up near a village in eastern Ukraine, the fate of the passengers aboard the plane wasn’t immediately known though an AP journalist counted at least 22 bodies at the Ukrainian plane wreckage site.

Reuters A view of the site of a Malaysia Airlines Boeing 777 plane crash in the settlement of Grabovo in the Donetsk region, July 17, 2014.

Reuters
A view of the site of a Malaysia Airlines Boeing 777 plane crash in the settlement of Grabovo in the Donetsk region, July 17, 2014.

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.”

Read More Stocks drop on reports plane shot down over Ukraine

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

“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 continuous updates from verified social media accounts about the situation, scroll to this article’s bottom.)

Separatist leader Andrei Purgin told The Associated Press that he was certain that Ukrainian troops had shot the plane down but gave no explanation or proof for his statement.

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.

In a phone conversion, Russian President Vladimir Putin told U.S. President Barack Obama that a Malaysian airplane crashed on Ukrainian territory, the Kremlin said. Obama is asking his advisers to keep him updated on reports of a plane shot down over Ukraine, but the White House says it can’t confirm the reports. The two leaders held a pre-planned call on the situation in Ukraine during which information became available from air traffic controllers about the crash.

Read More Obama warns Putin of more sanctions over Ukraine

A State Department spokeswoman said the U.S. embassy in Kievwas in touch with Ukrainian authorities, but the State Department did not have any further details on the plane, victims or causes. Secretary of State JohnKerry had not yet spoken to other foreign leaders on the incident, she added.

Reuters reported that Ukraine’s prime minister has identified the shot-down plane as 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 on Friday he was shocked by reports a Malaysia Airlines plane had gone down over Ukraine and he was planning an investigation.

On his Facebook page, Ukraine’s Minister of Internal Affairs Anton Gerashchenko claims that terrorists struck down the plane under Putin’s orders.

In a CNBC interview, Retired U.S. General Barry McCaffrey said, “This was a major strike, a deliberate strike to get an aircraft at that altitude.”

The Malaysian Airlines flight operated on a Boeing 777. Boeing says it is aware of media reports and is gathering more information on the situation.

Dutch state broadcaster NOS reported that one of the country’s travel agencies had 25 people booked aboard the MalaysianAirlines flight, some headed to Kuala Lumpur and others planning to continue on to Australia and New Zealand. Tour operator WTC had between 20 and 30 booked on the flight as well. It was not clear if all of them were on the plane.

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 Malaysian Airlines Boeing 777 that 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.

Gold, under selling pressure this week, was last 1.4 percent higher at $1,318 per troy ounce, and wheat, a major crop of Ukraine, jumped more than 3 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 2.48 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 White House said it was aware of reports and monitoring the situation in the Ukraine. Regarding an possible impact on U.S. flight operations, a TSA official said, “We simply don’t know enough information to make any kind of decision. It just 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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