pro-russian separatist
Armed pro-Russian separatists stand guard on the suburbs of Shakhtarsk(Reuters)

The European Union and the United States have agreed to tighten economic sanctions over Russia's role in the Ukraine crisis.

Fresh sanctions, agreed between leaders from Germany, France, Britain, Italy and the US, are set to target Russia's financial, defence and energy sectors.

The US and the EU have agreed to increase the pressure on Russia's Vladimir Putin after the Malaysia Airlines plane was shot down over a rebel-held region of eastern Ukraine.

The downing of MH17, in which 298 people were killed, could be the tipping point for the EU. Its leaders had previously shown reluctance to impose wider sanctions on Russia in light of the extensive economic cooperation between the Europe and Moscow.

"The latest information from the region suggests that even since MH17 was shot down, Russia continues to transfer weapons across the border and to provide practical support to the separatists," said British Prime Minister David Cameron in a statement.

"Leaders agreed that the international community should therefore impose further costs on Russia and specifically that ambassadors from across the EU should agree a strong package of sectoral sanctions as swiftly as possible."

EU member states are set to reach a final agreement on Tuesday that could include shutting off European capital markets, halting future arms sales and restrictions on sharing technology that could be used in the energy or defence sectors.

The bloc has already imposed sanctions on dozens of individuals and some companies with close ties to the Kremlin, in the wake of Moscow's annexation of Crimea.

Russia's Foreign Minister Sergei Lavrov said any new sanctions would only serve to make Russia stronger.

"We will overcome any difficulties that may arise in certain areas of the economy, and maybe we will become more independent and more confident in our own strength," he told a press conference.

Moscow has blamed the Malaysia airliner crash on the Ukrainian military.