RUSSIA has rebuffed Western demands to withdraw forces in Ukraine's Crimea region to their bases amid a day of high-stakes diplomacy in Paris aimed at easing tensions over Ukraine and averting the risk of war.
The EU offered Ukraine's new pro-Western government £9 billion in financial aid in the next couple of years provided Kiev reaches a deal with the International Monetary Fund.
Meanwhile, a UN special envoy, Dutch diplomat Robert Serry, had to abandon a mission to Crimea after being stopped by armed men and besieged inside a cafe by a hostile crowd shouting: "Russia! Russia!"
And the US Defence Department, in an apparent attempt to signal resolve to Moscow, announced military measures to support eastern European Nato allies adjoining Russia and Ukraine.
Last night Chancellor George Osborne announced plans by the UK to freeze assets of 18 Ukrainians accused of embezzling Ukrainian state funds.
And Nato warned it was reviewing all co-operation with Russia as it increased links with the authorities in Ukraine.
The foreign ministers of Russia, the US, Britain, and Germany met their French counterpart and French President Francois Hollande in Paris to try to start a diplomatic process to defuse the crisis.
Russian Foreign Minister Sergei Lavrov repeated Moscow's assertion - ridiculed by the West - that troops who have seized control of the Black Sea peninsula are not under Russian command.
And after meeting US Secretary of State John Kerry, Mr Lavrov said Moscow and Western powers had agreed the Ukrainian government and opposition need to stick to a EU-brokered peace deal.
Mr Lavrov said the two sides agreed to join efforts to help Ukraine to meet the agreement signed in Kiev on February 21.
In a sign of heightened tensions in eastern Ukraine, a pro-Russian crowd in Donetsk, the home town of ousted president Viktor Yanukovich, recaptured a regional administration building they had occupied before being ejected by police.
France said EU leaders would meet in Brussels today and could decide on sanctions against Russia if there is no "de-escalation" by then.
French Foreign Minister Laurent Fabius said early measures could include restrictions on visas, the assets of individuals and existing discussions on economic ties with Russia.
President Vladimir Putin has defended Russia's actions in Crimea and said he would use force only as a last resort.
This eased market fears of a war over the former Soviet republic after sharp falls on Monday, though Russian shares and the rouble slipped again yesterday and Ukraine's hryvnia dropped against the dollar.
Russian forces remain in control of Crimea where they seized control of two Ukrainian missile defence sites overnight and Mr Putin gave no sign of backing down.
In Brussels, European Commission President Jose Manuel Barroso said EU assistance to Kiev would in part be contingent on Ukraine signing an IMF loan deal, which will require painful economic reforms such as ending domestic gas subsidies and letting the hryvnia float.
Mr Barroso said: "The package combined could bring an overall support of at least €11bn (£9bn) over the next couple of years."
Mr Putin told his cabinet yesterday he did not want political tension to detract from economic cooperation with Russia's "traditional partners".
But the Foreign Ministry said Moscow was preparing counter-measures against Western firms if necessary.
Canadian Prime Minister Stephen Harper said after speaking to US President Barack Obama the Group of Seven leading industrialised nations were considering meeting in the near future, a move that would exclude Russia, which joined what became the G8 in 1998.
Mr Lavrov had earlier told EU foreign policy chief Catherine Ashton the EU-brokered agreement signed by political leaders in Kiev last month should be the basis for stabilising the situation in Ukraine.
In Washington, Defence Secretary Chuck Hagel told Congress the US military was stepping up joint training through an aviation detachment in Poland and boosting participation in a Nato air policing mission over the Baltic states, Estonia, Latvia and Lithuania - the only former Soviet republics that are members of the Western alliance.