European shares are dented by the latest round of sanctions on Russia, which are targeting oil producer Rosneft and other energy, financial and defence firms. How deeply will the impact be felt by Russia - and will the EU follow with its own measures? Joanna Partridge reports.
Increasing the pressure on Russia. The United States imposed the toughest sanctions so far on Moscow - over its failure to end violence in Ukraine. For the first time, the measures hit some of Russia's biggest firms - and those closest to President Vladimir Putin. Its largest oil producer Rosneft, second largest gas produced Novatek and third largest bank Gazprombank - all run by wealthy Putin allies. In effect, the sanctions close the firms to medium and long-term dollar funding. It comes after months of measures which only hit individuals or smaller firms. Putin reacted to the news during a trip to Brazil. SOUNDBITE: RUSSIAN PRESIDENT, VLADIMIR PUTIN, SAYING (Russian): "Sanctions have a boomerang effect and without any doubt they will push U.S.-Russian relations to a dead end, and cause very serious damage, and I am sure that this also damages national long-term strategic interests of the U.S. government and the U.S. people." Russia's stock market and the rouble fell slightly. But the market response was mostly muted. Washington stopped short of freezing companies' assets, closing off their short-term funding for daily operations, or stopping U.S firms doing business with them - measures which would take sanctions into so-called 'Stage Three'. Chris Weafer is from Moscow-based consultancy Macro Advisory Limited. SOUNDBITE: Chris Weafer, Senior Partner, Macro Advisory Limited, saying (English): "Had sanctions included either two of the main banks, the two commercial banks Sperbank and VTB, that would be Stage 3 sanctions. Had the sanctions prohibited the U.S. companies from working with Russian oil companies for example Exxon working with Rosneft, that would have been a stage 3 sanction." Washington has now moved far further than its European allies in punishing Russia. The EU does around 10 times as much trade with Russia as the U.S.and depends on Moscow for gas. But it has said it will impose new sanctions and will draw up a list of targets by the end of July. SOUNDBITE: Chris Weafer, Senior Partner, Macro Advisory Limited, saying (English): "You could see this as good cop-bad cop, the U.S. have laid out the sanctions and the Europeans are giving more time for talks, or you know of course we do realise that both sides are coming from a fundamentally different political and if you like trade position, the European trade position with Russia is much greater and therefore much more vulnerable to any disruption." While EU leaders seem to be united in the need for further sanctions, they can't find agreement on issues closer to home. They've failed to choose how to share out top jobs in the European Commission, including the new foreign policy chief, and have postponed the decision until late August.