The Russian rouble has fallen to a historically low level against the dollar on fears that Russian moves in Ukraine would provoke further Western sanctions. As Ciara Lee reports the new uncertainty is again making investors nervous.
The moment Russia crossed the line. Nato says these pictures show Moscow violating Ukraine's sovereignty in a military operation to support pro-Russian rebels. The photographs accompanied accusations that the border was crossed illegally, in the Kremlin's most aggressive action in the crisis so far. 2500 people have been killed in fighting in eastern Ukraine since it erupted in mid-April But Russia denies that its military is fighting. Foreign Minister Sergei Lavrov. (SOUNDBITE) (Russian) RUSSIAN FOREIGN MINISTER, SERGEI LAVROV, SAYING: "It's not the first time allegations have been made. From the very beginning of the crisis we have been blamed for everything." But that wasn't enough to stop fears rattling round the markets. The Russian rouble fell to an all time low against the dollar, as concerns grow that further sanctions from the west are to come. Some in Moscow are also voicing concern. (SOUNDBITE) (Russian) MOSCOW RESIDENT, DASHA, SAYING: "As I receive my salary in rubles, of course there is a substantial rise in prices. When you go abroad, this difference of the rising exchange rate affects the budget of the trip a lot. So I think it influences ordinary people." German lawmakers say Europe should respond to the escalation with further sanctions against Russia. Germany, with close trade and energy ties with Russia, has long resisted tougher sanctions, but agreed to stronger measures after the downing of a Malaysian airliner in July. Foreign Minister Frank Walter. (SOUNDBITE) (German) GERMAN FOREIGN MINISTER FRANK WALTER STEINMEIER SAYING: "The already dangerous situation in eastern Ukraine has now entered a whole new dimension, all the hopes we had that direct talks between president Poroshenko and president Putin would contribute to deescalating the situation have been disappointed". The issue of gas remains key in Europe. Russia says it is ready to hold gas talks with Ukraine and offer a price cut. Ukraine's supplies are said to have reached a critical level, with winter fast approaching. But the European Commission warns gas should not be used as a "tool for sanctions". Russia has been hit with measures targeting the oil and banking sectors, as well as wealthy individuals. But sanctions imposed so far have not deterred Russia, despite its growth forecasts plummeting and investors pulling money out of the country.