By Anton Zverev
HRABOVE, Ukraine, July 18 (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.
Two U.S. officials said Washington strongly suspected the Malaysian Airlines Boeing 777 was downed by a sophisticated surface-to-air missile fired by Ukrainian separatists backed by Moscow.
There were no survivors from Thursday's crash, which left wreckage and bodies scattered 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.
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.
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.
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 Defense Ministry later pointed the finger at Ukrainian ground forces, saying said 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 armories of its armed forces.
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 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.
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.
An OSCE spokesman said the organization, which has monitors in the region, expected to reach the site later on Friday.
The plane's two black boxes - voice and data recorders - were quickly recovered, but since the crash site was in rebel hands it was unclear who would analyze them and whether they could in any case 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".
"While we do not yet have all the facts, we do know that this incident occurred in the context of a crisis in Ukraine that is fueled by Russian support for the separatists, including through arms, materiel, and training," White House spokesman Josh Earnest said in a statement.
More than half of the dead, 173 people, were Dutch. Forty-four were Malaysian, 27 Australian, 12 Indonesian, nine British, four German, four Belgian, three Filipino and one each from Canada, New Zealand and Romania. All 15 crew were Malaysian.
Nationalities of the others aboard were unclear.
A number of those on board were traveling 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.
"If it transpires that the plane was indeed shot down, we insist that the perpetrators must swiftly be brought to justice," Malaysian Prime Minister Najib Razak told a pre-dawn news conference in Kuala Lumpur.
"This is a tragic day, in what has already been a tragic year, for Malaysia."
The transport minister said the plane's route was approved by international aviation officials.
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 later called for a "thorough and unbiased" investigation.
U.S. President Barack Obama said evidence from the crash must remain in Ukraine so international investigators have a chance to look at all of it, officials said.
The OSCE said a "contact group" of senior representatives from Ukraine, Russia and the OSCE had held a video conference with the separatists, who pledged to cooperate with Ukrainian authorities in the investigation.
Kiev complained that separatists prevented Ukrainian officials from reaching the site, where pro-Russian separatists said they had found one of the "black box" recorders. Rescue workers recovered a second recorder on Friday.
U.N. Secretary-General Ban Ki-moon also called for a transparent international investigation. The U.N. Security Council will discuss the issue on Friday.
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 destabilize 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.
International air lanes had been open in the area, though only above 32,000 feet. The Malaysia plane was flying 1,000 feet higher, officials said. (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 and Alastair Macdonald)