GLOBAL MARKETS-Stocks fall, bond prices rise after Malaysian air crash

* Russia assets fall as U.S., EU impose more sanctions

* U.S. housing starts weak, but Morgan Stanley (Xetra: 885836 - news) up on results

* European shares sag after strongest day in three months

(Adds report of plane crash, updates prices)

By Ryan Vlastelica

NEW YORK, July 17 (Reuters) - Stock markets around the world

on Thursday extended losses while safe-haven assets rose

following news that a Malaysian airlines jet had crashed near in

eastern Ukraine near the Russia border.

According to a Ukrainian interior ministry adviser, almost

300 people died in the crash, caused by a missile fired at the

plane. The report follows an increase in tensions between

Ukraine and Russia that has resulted in clashes along the

border, including the targeting of aircraft.

"There is a safe-haven bid across the curve on these

reports," said Justin Lederer, Treasury strategist at Cantor

Fitzgerald in New York.

Wall Street stocks fell to session lows following the report

and European shares added to their losses. Gold prices spiked,

as did U.S. Treasuries. Stocks of airline companies were hit

hard, with the NYSE Arca Airline Index dropping 1.3

percent.

The Dow Jones industrial average fell 56.87 points or

0.33 percent, to 17,081.33, the S&P 500 lost 10.15 points

or 0.51 percent, to 1,971.42 and the Nasdaq Composite

dropped 29.16 points or 0.66 percent, to 4,396.81.

The benchmark U.S. 10-year Treasury note rose

13/32 in price, yielding 2.482 percent. Gold prices

jumped more than 1 percent in their biggest one-day advance in

about a month.

The pan-European FTSEurofirst 300 was down 1

percent and the MSCI International ACWI Price Index

increased losses to 0.6 percent.

The Japanese yen rose 0.3 percent against the dollar,

while the Swiss franc was little changed and the U.S.

dollar was flat against a basket of currencies.

U.S. crude futures rose 1.5 percent to $102.72 per

barrel.

(Editing by Meredith Mazzilli and James Dalgleish)