The US and European governments have agreed new sanctions against Russia, targeting its oil, finance and defence industries, following the downing of Malaysia Airlines flight MH17 in eastern Ukraine.
US President Barack Obama denied the West was being drawn into "a new Cold War", but aimed to "ratchet up the pressure on Russia, including the cronies and companies supporting Russia's illegal actions in Ukraine".
He said the coordinated action would have "an even bigger bite" and make "a weak Russian economy even weaker".
The US is expanding its sanctions to include more Russian banks and defence companies, and is suspending credit that encourages exports to Russia and financing for economic development projects in Russia.
John Kerry warns Russia the US is 'preparing additional sanctions' The sanctions on three Russian banks, including VTB, its subsidiary Bank of Moscow and Russian Agricultural Bank, ban any Americans or people in US jurisdictions from any new medium or long-term financial transactions with them.
The EU sanctions are targeted at Russia's oil, finance, defence and technology industries, including dual-use goods with both defence and civilian purposes.
Measures include a ban on future arms import and export sales and restrictions on certain oil exploration and oil drilling related products.
Russian state-owned banks will also find restrictions on access to European financial markets, meaning their costs could rise.
The City of London may be affected by the new sanctions The move is seen as an extension of existing US and EU sanctions which have focused on wealthy individuals, imposing travel bans and asset freezes on members of Russian President Vladimir Putin's inner circle.
Eight more names are being added to that list, some of whom are understood to be very close to Mr Putin who has shown no sign of altering his stance on Ukraine.
Even in advance of any deal, the oil giant BP warned that tougher sanctions could have an adverse impact on its business because of its stake in Russian oil producer Rosneft.
British Prime Minister David Cameron has warned the measures will inflict pain on the City of London, but should be seen in the context of the deaths of the 298 MH17 passengers and crew.
Fighting forced OSCE experts to abandon a crash site visit on Monday EU President Herman Van Rompuy said the sanctions were "meant as a strong warning", but were "reversible" if Moscow changed course in Ukraine.
But US Secretary John Kerry said there was "no shred of evidence" Russia was willing to help end the violence and bloodshed between Moscow-backed rebels and Kiev.
He said even since flight MH17 was shot down, there was "clear evidence" the Russians were "continuing to ship arms across the border".
His comments came as pro-Russian separatists in eastern Ukraine said they were considering banning OSCE (Organisation for Security and Cooperation in Europe) investigators from the plane crash site in Grabovo, accusing them of "serving the interests of the United States and Ukraine".
Around 23 people, including three children, were killed as the fighting between rebels and Ukrainian forces in the region continued on Tuesday with shelling hitting a school, a home and several apartment blocks in the cities of Horlivka, Luhansk and Donetsk.
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