The European Union is ready to provide €11 billion of financial support to Ukraine over the next couple of years via a series of loans and grants, European Commission president Jose Manuel Barroso said today.

The assistance would be delivered in co-ordination with the European Bank for Reconstruction and Development and the European Investment Bank, and is in part contingent on Ukraine signing a deal with the International Monetary Fund.

“The package combined could bring an overall support of at least €11 billion over the next couple of years, from the EU budget and EU-based international financial institutions,” Mr Barroso told a news conference.

The announcement comes a day after the United States offered $1 billion in loan guarantees and said it would send technical experts to Ukraine to advise its central bank and finance ministry on how to tackle economic difficulties.

Ukraine is on the verge of bankruptcy because of economic mismanagement, high energy costs and currency turmoil fuelled by a conflict with Russia since the ouster of Moscow-backed President Viktor Yanukovich in February.

The West has stepped up efforts in recent days to persuade Moscow to pull its forces from the Ukrainian Crimea peninsula, which they seized after the fall of Yanukovich, and avert the risk of war.

The EU also plans to bring forward trade benefits that Ukraine would have received had it signed an association agreement with the EU last year, and will work on providing energy to Ukraine via “reverse flows” of gas from the EU. Kiev’s new rulers have said they need $35 billion over the next two years.

But its shorter-term requirements are much less and are estimated to be around $4 billion, according to some EU officials.

European leaders will hold an emergency summit tomorrow in Brussels to discuss what steps to take next on Russia, having threatened sanctions if Moscow does not reverse course in Ukraine.

Earlier, Ukraine’s finance minister said he did not rule out continuing co-operation with Russia over a $15-billion financial bailout package but that a decision could depend on whether Kiev gets a better offer from elsewhere.

"If we can count on getting more attractive funds, we will no longer continue the Eurobond programme," finance minister Oleksander Shlapak told reporters.

Russian bought Ukrainian Eurobonds worth $3 billion in December under the bailout offered by Moscow after Kiev spurned a trade and political pact with the European Union and turned to Moscow instead.

Russia has withheld the $2-billion second tranche of the bailout and has not said whether it will continue with the programme since the removal of Moscow-backed Viktor Yanukovich as president last month.

Ukraine is holding talks with the International Monetary Fund on a new financial programme.

European shares were steady today as Washington and Moscow set up talks to ease tensions over Ukraine.

The FTSEurofirst 300 was down 0.1 per cent at 1,343.23 points earlier , after two days of sharp swings.

European stocks surged on Tuesday, reversing a big portion of the previous session's sharp losses, and the S&P 500 closed at a record high, after Russian president Vladimir Putin said he would use force in neighbouring Ukraine only as a last resort.

Mr Putin’s first comments on the crisis over the Ukrainian region of Crimea, interpreted as an attempt to reduce tensions, helped fuel a rebound in equities worldwide.

"Investors continue to contemplate what the position is as far as Ukraine is concerned. I think there is still some caution there in the background ... Having said that ... we did see the markets bounce aggressively yesterday," Keith Bowman, equity analyst at Hargreaves Lansdown, said.