European leaders move to punish Russia after renewed Ukraine violence

EU leaders have tasked their foreign ministers with preparing penalties to impose on Moscow in response to the escalating conflict in eastern Ukraine.

In a joint statement, all 28 leaders of the European Union nations instructed foreign ministers to "consider any appropriate action, in particular on further restrictive measures".

Foreign ministers will meet on Thursday (29 January) after an extraordinary meeting was called, following reports of heavy shelling after Ukraine's military reported that nine of its soldiers had been killed in the past 24 hours.

The request comes after a sharp escalation of violence in eastern Ukraine. Pro-Russian separatists have recently seized the airport close to Donetsk and launched an attack on the city of Mariupol, leading to the deaths of 30 civilians over the weekend, according to Kiev.

Ukraine's parliament has condemned the renewed fighting and approved a resolution that defines Russia as an "aggressor state."

The same resolution defines the rebels' self-declared republics as "terrorist organisations".

More than 5,000 people have been killed in the fighting since April last year, according to UN figures.

The foreign ministers could potentially ask the European Commission to prepare further economic sanctions for Russia, which would then need to be signed off by EU heads of state and government.

Russia credit rating trashed

Meanwhile, Russia announced a fresh economic plan after the Standard and Poors ratings agency cut its credit rating to junk.

Russia's economy has been badly damaged by the falling value of the ruble, as well as by sanctions imposed by the West over its alleged role in the Ukraine crisis.

The plan aims to have the economy in a budget surplus in 2017. Russia is widely expected to fall into recession during 2015.