EU Gives Russia Ultimatum Over Ukraine Crisis

Russia could be facing a fresh wave of EU sanctions within a week after Russian tanks reportedly attacked a town near the Ukrainian border city of Luhansk.

Ukrainian President Petro Poroshenko said tanks had been used to "destroy virtually every house" in the town of Novosvitlivka.

There were now thousands of foreign troops and hundreds of foreign tanks inside Ukraine, he told a news conference in Brussels, where EU leaders met to discuss the crisis.

"There is a very high risk not only for peace and stability for Ukraine but for the whole peace and stability of Europe," he said.

After meeting his European counterparts, Mr Poroshenko warned that efforts to end violence with pro-Russian rebels were close to a "point of no return" and that failure could lead to "full-scale war".

European leaders have ordered officials to make urgent preparations for a toughening of measures, likely to target senior Kremlin figures as well as the defence, energy and financial sectors.

Satellite imagery reportedly shows Russian military vehicles inside Ukraine

Prime Minister David Cameron said the EU summit had taken "important steps" and the European Commission would present firm proposals for tougher sanctions within a week.

"It is totally unacceptable that there are Russian soldiers on Ukrainian soil. We have now set out a timetable for further sanctions that could be ... significant steps," Mr Cameron said.

"It's a deeply serious situation and we have to show real resolve, real resilience in demonstrating to Russia that if she carries on in this way the relationship we have between Europe and Russia, Britain and Russia, America and Russia will be radically different in the future."

Outgoing EU Commission head Jose Manuel Barroso insisted it was not too late to find a political solution, but he added: "We are in a very serious, I would say, dramatic situation ... where we can reach the point of no return.

"If the escalation of the conflict continues, this point can come."

He added: "Russia should not underestimate the European Union's will and resolve to stand by its principles and values."

This image shows trucks and armoured vehicles near the Russia border

Meanwhile, Lithuanian President Dalia Grybauskaite called for a stepped up arms embargo on Russia.

She said: "It is the fact that Russia is in a war state against Ukraine. That means it is in a state of war against a country which would like to be closely integrated with the EU.

"Practically Russia is in a state of war against Europe."

It comes after a mutual exchange of captured soldiers between Ukraine and Russia on Sunday.

A group of 10 Russian paratroopers and 63 Ukrainian soldiers were returned after "very difficult negotiations", according to the Russian RIA news agency.

Russian President Vladimir Putin, in a TV show recorded on Friday, again denied that Moscow had sent troops to fight in Ukraine.

He said: "We need to immediately begin substantive talks... on questions of the political organisation of society and statehood in southeastern Ukraine with the goal of protecting the lawful interests of the people who live there."

He added that the West "should have known that Russia cannot stand aside when people are being shot at point-blank range".

Nato released images apparently showing Russian forces on the ground in eastern Ukraine.

Government sources said separatists are believed to have heavy weaponry supplied by President Vladimir Putin.

Included in the weaponry are 100 tanks and artillery pieces, anti-tank weapons and shoulder-mounted missile launchers, the sources said.

Russia has repeatedly dismissed accusations it has sent soldiers or equipment across the border.

President Barack Obama has said the satellite pictures made it "plain" that Russia had "deliberately and repeatedly violated the sovereignty and territorial integrity of Ukraine".

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