Russia's foreign ministry has vowed to react if the European Union implements new sanctions against Moscow over its role in the Ukraine crisis.
The EU announced the additional measures late last night but said they could be suspended if Moscow withdraws its troops from Ukraine and observes a newly agreed ceasefire in eastern Ukraine.
The new sanctions include adding a further 24 people to a list of people barred from entry to the 28-nation bloc and whose assets are frozen. They are due to be implemented on Monday.
“If they (new sanctions) are implemented of course there will be a reaction from our side,” the Russian ministry said in a statement today.
The statement comes as a ceasefire agreed by the Ukrainian government and pro-Russia rebels in the east appears to be holding.
There were no confirmed reports of fighting overnight, after the deal was struck in Minsk in Belarus yesterday.
Ukraine's president Petro Poroshenko says there should now be talks about a long-term solution to the conflict, which has killed about 2,600 people.
However, the rebels said the ceasefire had not changed their policy of wanting to separate from Ukraine.
A ceasefire agreement reached by Ukraine and pro-Russian rebels last night appears to be holding this morning with no confirmed reports of fighting overnight.
The deal is seen as a first step towards ending fighting in eastern Ukraine that has caused the worst standoff between Moscow and the West since the Cold War ended.
Alongside the ceasefire is a deal allowing for prisoner exchanges, deliveries of humanitarian aid and the withdrawal of heavy weapons after five months of a conflict that has killed more than 2,600 people.
Despite some initial shelling in the rebel stronghold of Donetsk after the truce began at 6pm (3pm Irish time), the ceasefire appeared to be holding.
But many residents and combatants were sceptical that the ceasefire could last long or provide the basis for a durable peace settlement.
The two sides remain far apart on the future of the region. Despite the deal, the European Union slapped new economic sanctions on Russia - the latest in a series of measures aimed at punishing Moscow over Ukraine.
But the EU said the sanctions could be suspended if Russia withdraws its troops from
Ukraine and observes the ceasefire. A senior EU diplomat said implementation is expected on Monday.
Some provisions will make it harder for Russian state-owned firms to raise finance in the EU. Diplomats expect them to hit, among others, the oil company Rosneft and units of Gazprom though not the gas firm itself, a main supplier to the EU.
“Human life is the highest value. We must do everything possible and impossible to end the bloodshed and put an end to people’s suffering,” Ukrainian president Petro Poroshenko said in a statement announcing the truce, reached with representatives of Russia and the OSCE security watchdog.
The Kremlin welcomed the agreement, based largely on proposals made by President Vladimir Putin and leaving the pro-Russian separatists in control of vast swaths of territory.
Mr Putin's press secretary, Dmitry Peskov, urged the sides to build on the deal and seek a permanent political settlement, although many problems remain and an earlier June ceasefire lasted only 10 days.
At a Nato summit in Wales, US president Barack Obama, who accuses Russia of arming the rebels and sending in troops to back them, reacted with scepticism to the deal.
“With respect to the ceasefire agreement, obviously we are hopeful, but based on past experience also sceptical that in fact the separatists will follow through and the Russians will stop violating Ukraine’s sovereignty and territorial integrity. So it has to be tested,” Mr Obama told a news conference.
"We also sent a strong message to Russia that actions have consequences. Today the United States and Europe are finalising measures to deepen and broaden our sanctions across Russia's financial, energy and defence sectors," Mr Obama added.
The agreement among the European Union countries expanded the package of sanctions against Russia to measures related to access to capital markets, defence, dual-use goods with both military and civilian applications and sensitive technology. A further 24 people were added to a list of those barred from entry to the bloc and whose assets in the EU are frozen. Also attending the NATO summit, Mr Poroshenko told reporters
Ukraine was ready to grant a significant decentralization of power and economic freedom to the regions as well as the right to use the language of their choice and an amnesty. A senior rebel leader said separatists still want a formal split for their mainly Russian-speaking regions.
"The ceasefire does not mean the end of (our) policy to split (from Ukraine)," Igor Plotnitsky, a leader of the Luhansk region, told reporters. NATO also sent a firm message to Russia by approving wide-ranging plans to boost its defences in eastern Europe, aiming to reassure allies nervous about Russia's intervention in Ukraine that the US-led alliance will shield them from any attack.
The plan includes creating a “spearhead” rapid reaction force and pre-positioning supplies and equipment in eastern European countries so they can be reinforced within days in a crisis.
Reuters