Washington has announced its most wide-ranging sanctions yet against Russia over Ukraine, targeting key institutions such as banks and defence and energy firms.

It comes as 12,00 Russian forces were reported back on the border with Ukraine.

Washington accuses Russia of failing to fulfill its promise to de-escalate tensions in it neighbour and to stop selling weaponry to separatist rebels.

US President Barack Obama said Russia must learn to face the consequences of its actions:

“We are taking these actions in close consultations with our European allies. Who are meeting in Brussels to agree on their next steps and what we are expecting is that the Russian leadership will see once again that’s its actions in Ukraine have consequences. Including a weakening Russian economy and increasing diplomatic isolation.”

Russian President Vladimir Putin’s response was to warn they would as likely hurt the US as much as the Russian economy:

“Concerning these measures, as I’ve already said, as usual they have a boomerang effect and there’s no doubt in this situation they take the Russian-American relationship to a dead end.”

EU leaders have also agreed to stiffen their own sanctions. Along with targeting companies that operate within annexed Crimea they are now intending to penalise banks lending funds for reconstruction and development projects within Russia itself.