Russian President Vladimir Putin has warned that new biting sanctions against his country over its actions in Ukraine will boomerang and hit back at US national interests.

The US and European Union dramatically strengthened sanctions on Moscow over Ukraine on Wednesday, with Washington for the first time directly targeting Russia's banking, military and energy sectors.

"Without any doubt in this case [sanctions] are driving Russian-US relations towards a dead end, [and] are inflicting very serious damage on them," the state news agency ITAR TASS quoted Putin as saying while on a visit to Brasilia.

"And I am convinced that this will harm the national long-term interests of the American state, the American people," Putin told reporters on Thursday.

The latest measures against Russia deepened the most serious standoff between Moscow and the West since the end of the Cold War, as fighting between the Kiev government forces and pro-Russian separatists threatened to escalate into all-out civil war.

Sarcasm

The Russian president reacted sarcastically when a journalist said that Washington had announced new sanctions against Russia and asked him to comment.

"You don't say!" he was quoted as saying.

At the same time, Putin, who is on a six-day visit to Latin America, expressed hope that common sense would prevail and the two countries would be able to settle all disputes diplomatically.

"It is a pity that our partners are going along this road. But we have not closed a door on a negotiating process, in order to exit this situation."

He said US energy companies would be among top victims of Washington's new punitive measures.

"They inflict damage on their largest energy companies and all for what?" the Russian president was quoted as saying by the RIA Novosti news agency.

Obama ignored

Announcing the sanctions earlier at the White House, Barack Obama, the US president, said: "Given its continued provocations in Ukraine ... I have approved a new set of sanctions on some of Russia's largest companies and financial institutions."

The president said he had repeatedly told Putin to halt the flow of weapons across the eastern Ukraine border and to agree to genuine border monitoring measures.

"Russia has failed to take any of the steps that I mentioned," Obama said. "In fact, Russia's support for the separatists and violations of Ukraine's sovereignty have continued."

Washington's moves will have the effect of barring from US capital markets two major Russian financial institutions, Gazprombank and VEB, and two giant Russian energy firms, OA Novatek and Rosneft.

The US Treasury also said that eight Russian arms firms that produce small armaments, mortar shells and tanks would also face direct sanctions.

The US list of sanctions included measures against the self-styled breakaway Donetsk People's Republic and the Lugansk People's Republic in eastern Ukraine.

Personal sanctions were imposed against Sergei Besesda, a key figure in Russia's FSB domestic intelligence service, and Oleg Savelyev, Russia's minister responsible for the annexed Ukrainian region of Crimea.

European leaders, meeting in Brussels signalled they were bolstering their own sanctions against Russia, following intensive conversations with Washington.

The moves will see the EU's European Investment Bank and European Bank of Reconstruction and Development, halt finance for projects in Russia, a diplomatic source told the AFP news agency.

The EU also agreed to target Russian firms linked to actions undermining Ukraine's sovereignty.