US prepares to step up sanctions on Russia over Ukraine escalation

The US has reiterated that it could step up sanctions on Russia over its actions in Ukraine, as it announced a new financial aid package to the embattled government in Kiev.

The US would provide Ukraine with $2bn in loan guarantees, to assist with "near-term social spending" in the war-torn country.

Ukraine's economy has been battered by more than a year of unrest in the country. In the wake of Russia's annexation of Crimea in March 2014, pro-Russian separatists launched an insurgency that has all but stopped regular economic activity in parts of east Ukraine.

More than 5,000 people have died in the conflict to date, as rebel groups fought for control of eastern Ukraine, including the major industrial city of Donetsk.

Fighting has escalated in recent weeks, as rebel groups took control of the Donetsk airport and launched an offensive for the port city of Mariupol.

In response, the US and the EU have threatened to impose tougher sanctions on Russia, who they accuse of fuelling the conflict by sending troops and weapons to eastern Ukraine.

"We remain prepared to do more [on sanctions] if necessary. To that end, we will continue to work with our allies to increase the pressure on Russia," said US Treasury Secretary Jack Lew.

Moscow has denied any involvement in the conflict in eastern Ukraine.