Ukraine crisis and sanctions on Russia
Pro-Russian protesters take part in a rally near the seized office of the SBU state security service in Luhansk, eastern UkraineReuters

The cost of insuring against Russian government debt has risen to its highest level since November 2011, amid expectations the United States will announce fresh economic sanctions against Russia.

The cost of five-year credit default swaps rose four basis points to 288, making Russia one of the most expensive government debts to insure along with Argentina, Ukraine and Venezuela.

The costs rose again after the White House announced sanctions would be imposed on individuals and businesses inside Russian President Vladimir Putin's "inner circle".

Washington is planning to impose the sanctions after they believe Russia failed to live up to an agreement to defuse the situation in eastern Ukraine, where armed groups have seized and occupy government buildings.

Washington is also planning to restrict exports of high-tech exports to Russia's defence industry, while the G7 agreed on Saturday to impose further sanctions against Moscow.

A credit default swap works by the seller of the contract offering to pay the buyer in the event of a default. The buyer pays a pre-agreed rate over a certain period for the CDS, which is often used by the buyer as insurance to hedge against the risk of an investment elsewhere.

For example, investors in Russian debt may take out a Russia CDS to protect themselves against default.

Washington is due to outline sanctions today, while the European Union is also expected to announce new sanctions.

Washington has shown frustration at the EU's slower response to punish Moscow through economic measures in recent days. The bloc has a far greater exposure to Russia and relies on Moscow for around a third of its gas needs. Major German, Italian and British companies have also lobbied their governments in recent weeks in a bid to limit the potential fallout from sanctions against Russia.