US, Europe vow to impose stern new sanctions on Russia over Ukraine

Intense fighting between Ukrainian troops and pro-Russian rebels in eastern Ukraine killed dozens of civilians, soldiers and rebels, as Kiev pressed on with an offensive yesterday including near the wreckage of Malaysian flight MH17.

The escalating fighting came as US and European leaders prepared to punish Russian involvement in the Ukraine conflict by imposing wider sanctions on Russia's financial, defence and energy sectors.

The new sanctions, expected to be announced formally late yesterday, were discussed by US President Barack Obama and leaders of Germany, Britain, France and Italy in a conference call on Monday. They are aimed at increasing pressure on Russian President Vladimir Putin after the Malaysian airliner was shot down over territory held by pro-Moscow rebels in eastern Ukraine.

"It's precisely because we've not yet seen a strategic turn from Putin that we believe it's absolutely essential to take additional measures and that's what the Europeans and the United States intend to do this week," said Tony Blinken, a national security adviser to Obama.

EU member states were expected to try to reach a final deal yesterday on stronger measures that would include closing the bloc's capital markets to Russian state banks, an embargo on future arms sales and restrictions on energy technology and technology useful for defence. In Brussels, EU sources said diplomats had reached preliminary agreement on a new list of companies and people, including associates of Putin, to be targeted by asset freezes.

Western states believe the rebels brought down Malaysia Airlines flight MH17, with the loss of 298 lives, using a missile supplied by Russia.

"The latest information from the region suggests Russia continues to transfer weapons across the border and to provide practical support to the separatists," a statement issued by British Prime Minister David Cameron said after the leaders' call.