LONDON, July 18 — Emerging-market stocks fell the most in three weeks after a Malaysian passenger jet was shot down in Ukraine, fueling concerns tension in eastern Europe will escalate. The ringgit slid while Russian equities dropped.

Malaysian Airline System Bhd. slumped 8.9 per cent in Kuala Lumpur to lead regional carriers lower. The ringgit weakened 0.2 per cent while the FTSE Bursa Malaysia KLCI Index sank to a one- month low. OAO Gazprom led the Micex Index to the lowest level in seven weeks. China Vanke Co. and Poly Real Estate Group Co. surged more than 3 per cent on speculation more cities will loosen property curbs as home prices decline.

The MSCI Emerging Markets Index retreated 0.4 per cent to 1,057.96 at 9.04am in London, extending loss this week to 0.1 per cent this week. Ukraine’s government claimed pro-Russian rebels shot down the passenger jet which killed all 298 people on board. Israeli soldiers and tanks moved into the Gaza strip in a ground offensive after cease-fire efforts collapsed.

There is a “mild de-risking in markets” on the back of the downed jet and Israel’s ground offensive in Gaza, Mark Matthews, Singapore-based head of Asia research for Bank Julius Baer & Co, which oversees about US$377 billion (RM1.19 trillion), said by e-mail.

The developing-nation gauge has risen 5.5 per cent this year and trades at 11 times projected 12-month earnings, according to data compiled by Bloomberg. The MSCI World Index has added 4.6 per cent and is valued at a multiple of 15.

Ringgit Weakens

The ringgit ended a two-day gain and the KLCI Index fell 0.6 per cent, set for the lowest close since June 16. Malaysian Air headed for its biggest loss since June 24. The disaster comes four months after the disappearance of Flight 370 which contributed to the carrier’s biggest loss since 2011.

The Boeing Co. 777 crashed en route to Kuala Lumpur from Amsterdam in the main battleground of Ukraine’s civil war, threatening to escalate tensions in Europe’s worst geopolitical crisis since the end of the Cold War. The separatists denied involvement while Russia President Vladimir Putin blamed the Ukrainian government.

The Micex slid 1 per cent, while the ruble climbed 0.2 per cent after tumbling the most since September 2011 yesterday. Gazprom, Russia’s state-run natural gas exporter, lost 1.5 per cent and OAO Lukoil headed for its lowest close since May 30. Russian markets tumbled yesterday after the US imposed new sanctions on companies to punish Putin for failing to end support for the insurgency.

Malaysia Airports

Malaysia Airports Holdings Bhd. tumbled 5.1 per cent, the most since September 2011. The Bloomberg World Airlines Index slipped 0.1 per cent, following a 2 per cent tumble yesterday amid speculation the crash will deter fliers.

Cathay Pacific Airways Ltd., the biggest international carrier in Asia, dropped 0.6 per cent in Hong Kong. Delta Air Lines Inc., American Airlines Group Inc. and United Continental Holdings all sank more than 3.4 per cent in the US yesterday.

Nine out of 10 industry groups fell in the MSCI Emerging Markets Index, led by health-care companies and energy stocks. The Hang Seng China Enterprises Index lost 0.3 per cent.

The Shanghai Composite Index added 0.2 per cent, halting a two-day loss, as China’s largest developers China Vanke and Poly Real Estate rallied. The government is being pressured to remove restrictions on home purchases after data today showed prices fell in a record number of cities in June. China’s housing minister urged cities with large housing inventories to cut it “with all means,” the 21st Century Business Herald reported.

Indonesia’s rupiah and South Africa’s rand appreciated 0.6 per cent versus the dollar. Turkey’s lira climbed 0.5 per cent after weakening the most in a month yesterday.

Equity measures in Turkey, Thailand and the Philippines dropped at least 0.2 per cent, while Vietnam’s VN Index advanced 1 per cent to its highest level since April 11. — Reuters