Moscow is ready for a direct dialogue with Ukraine’s new president and does not need any Western mediation, Russia’s foreign minister has said.

Pro-Russian rebels paraded European monitors they are holding in eastern Ukraine yesterday, freeing one but saying they had no plans to release another seven as the US and Europe prepared new sanctions against Moscow.

The US stock market has ended lower as investors brace for a critical vote this weekend over the future of Ukraine’s Crimea peninsula.

US secretary of state John Kerry warned Russia that Washington and Europe were preparing a tough response to a breakaway vote in Ukraine’s Crimea, depending on how Moscow reacts.

President Barack Obama declared today that a referendum in 10 days on the future of a Ukraine’s Crimea peninsula would violate international law, and the United States moved to impose visa restrictions and financial sanctions on Russians and Ukrainians for the moves Moscow already has made into Crimea.

Europe’s mildest winter since 2007 has left the region with enough natural gas in storage to cover any future disruption in flows from Ukraine for about 45 days.

President Vladimir Putin ordered thousands of Russian troops participating in military exercises near Ukraine’s border to return to their base today as US Secretary of State John Kerry was on his way to Kiev.

Barack Obama has warned Moscow “there will be costs” if Russia intervenes militarily in crisis-torn Ukraine.

Russia’s order for 150,000 troops to test their combat readiness near Ukraine’s border has prompted a blunt warning from the United States that any military intervention in the crisis-torn nation would be a “grave mistake”.