With Reuters, CNN, Israel radio

An American Airlines passenger plane with 255 passengers and crew crashed into the Rockaways, Queens neighborhood of New York at 16:17 Israel time, 9:17 new York time, about five miles from JFK.

American Airlines flight 587 was took off from Kennedy airport, New York to Santo Domingo, Dominican Republic after a short delay. The plane was an Airbus A300 scheduled to leave at 8 AM and arrive in Santo Domingo at 12:48 PM.

Flames spread through the residential area as the jet, filled with fuel, crashed nose first. Citizens were told to evacuate the area between 129th St and Newport Avenue.

The Dow Jones tumbled about 2% right after the crash on fears that it was caused by terrorism. Frankfurt's DAX index immediately dipped to a 4% drop. But stocks quickly began to pick up again.

The cause of the crash is not known at this stage.

In the absence of concrete information, the American authorities are treating the incident as a terrorist attack. A U.S. official, speaking on condition of anonymity, said intelligence agencies, the FBI and the Federal Aviation Administration have found no evidence yet pointing to an attack, though an explosion was confirmed to have happened on the plane before it crashed.

Mayor Rudy Giuliani has declared a state of emergency in New York. He said there are two major crash sites, one where an engine that fell off the plane landed, the other where the body of the aircraft itself came down.

An eyewitness driving in the area says she saw "something" fall from the plane. The falling object was reportedly an engine.

All bridges and tunnels into New York and the three key airports ¿ Kennedy, La Guardia and Newark in New Jersey - were temporarily closed, as was the subway system.

The Pentagon says that although there were two fighter jets flying surveillance flights in the area, neither received any indication that the flight was in distress or that anything unusual was happening on board. No distress calls were heard.

American Airlines is operating an emergency United States phone number for family members to call for information: 1-800-245-0999.