(Reuters) - World leaders demanded an international investigation into the shooting down of a Malaysian airliner with 298 people on board over eastern Ukraine in a tragedy that could mark a pivotal moment in the worst crisis between Russia and the West since the Cold War.
As Ukraine sought to rally international support against Russia, two U.S. officials said Washington strongly suspected the Malaysian Airlines Boeing 777 was downed by a missile fired by Ukrainian separatists backed by Moscow.
There were no survivors from Thursday's crash, the deadliest such attack on a commercial airliner, which scattered wreckage and bodies across miles of rebel-held territory near the border with Russia.
Makeshift white flags marked where bodies lay in corn fields and among the debris. Others, stripped bare by the force of the crash, had been covered by polythene sheeting weighed down by stones, one marked with a flower in remembrance.
One woman told how a corpse smashed though the roof of her house. "There was a howling noise and everything started to rattle. Then objects started falling out of the sky," said Irina Tipunova, 65. "And then I heard a roar and she landed in the kitchen."
The scale of the disaster could prove a turning point for international pressure to resolve the crisis in Ukraine, which has killed hundreds since pro-Western protests toppled the Moscow-backed president in Kiev in February and Russia annexed the Crimea peninsula a month later.
While the West has imposed sanctions on Russia over Ukraine, the United States has been more aggressive than the European Union. Analysts say the response of Germany and other EU powers to the incident - possibly imposing more sanctions - could be crucial in deciding the next phase of the standoff with Moscow.
Some commentators even recalled Germany's sinking of the civilian liner Lusitania in 1915, which helped push the United States into World War I, but outrage in the West at Thursday's tragedy is not seen as leading to military intervention.
German Chancellor Angela Merkel, in an initial response, said it was too early to decide on further sanctions before it was known exactly what had happened to the plane.
Britain said the facts needed to be established by an international, UN-led investigation before additional sanctions were seriously considered.
Kiev and Moscow immediately blamed each other for the disaster, triggering a new phase in their propaganda war.
The plane crashed about 40 km (25 miles) from the border with Russia near the regional capital of Donetsk, an area that is a stronghold of rebels who have been fighting Ukrainian government forces and have brought down military aircraft.
Leaders of the rebels' self-proclaimed Donetsk People's Republic denied any involvement and said a Ukrainian air force jet had brought down the intercontinental flight.
Russia's Defence Ministry later pointed the finger at Ukrainian ground forces, saying it had picked up radar activity from a Ukrainian missile system south of Donetsk when the airliner was brought down, Russian media reported.
The Ukrainian security council said no missiles had been fired from the armouries of its armed forces. Officials also accused separatists of moving unused missiles into Russia after the incident.
The Ukrainian government released recordings it said were of Russian intelligence officers discussing the shooting down of a civilian airliner by rebels who may have mistaken it for a Ukrainian military plane.
The United States and Germany called for a ceasefire to allow access to the crash site, as did Merkel.
"There are many indications that the plane was shot down, so we have to take things very seriously," the German leader said.
Latvia, a former Soviet state now looking nervously towards Ukraine, said Russia bore "full responsibility" for providing the separatists with missiles. Neighbouring Lithuania spoke of "a brutal act of terror".
Separatists told the Organization for Security and Co-operation in Europe (OSCE), a security and rights agency, they would ensure safe access to the scene for international experts.
The OSCE said 30 observers and experts from the organisation, which has monitors in the region, had reached the site on Friday.
The plane's two black boxes - voice and data recorders - were recovered, but it was unlikely they could determine who fired the missile.
Further complicating any investigation, local people were seen removing pieces of wreckage as souvenirs. The condition of the metal can indicate if it has been struck by a missile.
Reuters journalists saw burning and charred wreckage bearing the red and blue Malaysia Airlines insignia and dozens of bodies in fields near the village of Hrabove.
Ukraine said on Friday that up to 181 bodies had been found. The airline said it was carrying 283 passengers and 15 crew.
"I was working in the field on my tractor when I heard the sound of a plane and then a bang," one local man told Reuters at Hrabove, known in Russian as Grabovo. "Then I saw the plane hit the ground and break in two. There was thick black smoke."
Ukraine has closed air space over the east of the country.
U.S. Vice President Joe Biden said it appeared the downing of the jetliner was not an accident and that it apparently was "blown out of the sky".
More than half of the dead passengers, 189 people, were Dutch. Twenty-nine were Malaysian, 27 Australian, 12 Indonesian, nine British, four German, four Belgian, three Filipino, one Canadian, one New Zealnd and 4 as yet unidentified. All 15 crew were Malaysian.
A number of those on board were travelling to an international AIDS conference in Melbourne, including Joep Lange, an influential Dutch expert.
"TRAGIC DAY, TRAGIC YEAR"
The loss of MH17 is the second devastating blow for Malaysia Airlines this year, following the mysterious disappearance of Flight MH370 in March, which vanished with 239 passengers and crew on board on its way from Kuala Lumpur to Beijing.
In Malaysia, there was a sense of disbelief that another airline disaster could strike so soon.
"This is a tragic day, in what has already been a tragic year, for Malaysia," Prime Minister Najib Razak said.
The transport minister said the plane's route was approved by international aviation officials, although some other airlines had shifted routes to avoid the area.
International air lanes had been open in the area, though only above 32,000 feet. The Malaysia plane was flying 1,000 feet higher, at the instruction of Ukrainian air traffic control, although the airline had asked to fly at 35,000 feet.
Relatives gathered at the airport in Kuala Lumpur.
Akma Mohammad Noor said her sister Rahimah was coming home to mark the Muslim festival of the end of Ramadan. "We were supposed to celebrate," Noor said, weeping.
The Netherlands declared a day of national mourning.
Ukraine accused pro-Moscow militants, aided by Russian military intelligence officers, of firing a long-range, Soviet-era SA-11 ground-to-air missile.
Russian President Vladimir Putin - accused by the West of backing the rebels in Ukraine - blamed Kiev for renewing its offensive against rebels two weeks ago after a ceasefire failed to hold. The Kremlin leader called it a "tragedy" but did not say who brought the Boeing 777 down.
He also called for a "thorough and unbiased" investigation and for a ceasefire in eastern Ukraine to allow for negotiations.
Ukrainian President Petro Poroshenko, who had stepped up an offensive in the east this month, spoke to Obama and sought to rally world opinion behind his cause.
"The external aggression against Ukraine is not just our problem but a threat to European and global security," he said.
Russia, which Western powers accuse of trying to destabilise Ukraine to maintain influence over its old Soviet empire, has accused Kiev's leaders of mounting a fascist coup. It says it is holding troops in readiness to protect Russian-speakers in the east - the same rationale it used for taking over Crimea.
News of the disaster came as Obama was on the phone with Putin, discussing a new round of economic sanctions that Washington and its allies have imposed to try to force Putin to do more to curb the revolt against the new government in Kiev.
Obama warned of further sanctions if Moscow did not change course in Ukraine, the White House said.
After the downing of several Ukrainian military aircraft in the area in recent months, including two this week, Kiev had accused Russian forces of playing a direct role.
Separatists were quoted in Russian media last month saying they had acquired a long-range SA-11 anti-aircraft system.
(Additional reporting by Natalya Zinets, Pavel Polityuk, Peter Graff and Elizabeth Piper in Kiev, Tim Heritage, Vladimir Soldatkin, Polina Devitt, Thomas Grove and Gabriela Baczynska in Moscow, Thomas Escritt in Amsterdam, Anuradha Raghu, Siva Govindasamy and Trinna Leong in Kuala Lumpur, Jane Wardell and Matt Siegel in Sydney and Phil Stewart, Warren Strobel, Jeff Mason, Steve Holland and Matt Spetalnick in Washington; Writing by Giles Elgood; Editing by Will Waterman, Alastair Macdonald and Philippa Fletcher)
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