Vladimir Putin
Russia's President Vladimir Putin reacts during a ceremony with Brazil's President Dilma RousseffReuters

Russia's VTB, the country's second largest bank, slipped 3% on Wednesday in the wake of fresh US and EU sanctions but overall stocks and shares rose as investors had already priced in the prospect of new sanctions.

The latest economic penalties target Russia's finance, defence and energy sectors.

VTB was sanctioned, along with VTB subsidiary Bank of Moscow and the Russian Agricultural Bank as the US Treasury imposed new measures.

The bank recovered some of the early losses to trade 1.55 down by 0635 GMT. In contrast, the MICEX index actually rose 1% in the same period.

Investors had speculated that the United States and the European Union would tighten sanctions on Russia after a Malaysian passenger airline crashed over rebel-held eastern Ukraine.

The West has accused the rebels of shooting down the plane with a Russian-supplied missile.

"All in all, while the European sanctions do not come as a big surprise, the good news is that the EU has left the door open to temper its position soon, as the sanctions could be reconsidered within three months," said Natalia Orlova, an analyst at Alfa Bank, in a note.

The EU and the US have already passed a range of sanctions against Moscow since it annexed the Crimea peninsula from Ukraine, targeting a range of individuals and companies with close links to the Kremlin.

The latest measures are by far the broadest penalties yet, targeting broad sectors of the Russian economy.

The Russian rouble was stable in early trading.