European Union governments will decide on new sanctions against Russia by Friday, incoming EU foreign policy chief Federica Mogherini has said.

Mogherini, told the European Parliament on Tuesday that Russia’s involvement in the Ukraine crisis called for "the strongest possible response".

EU leaders urged Russia on Saturday to withdraw its troops from Ukraine and stem the flow of weapons and fighters across its border into eastern Ukraine, where Ukrainian government forces have been battling pro-Moscow rebels since April.

Moscow has repeatedly denied to have sent troops or armour into Ukraine and has called on the government in Kiev to negotiate a peace settlement with the rebels.

The European Commission will present new tougher measures against Russia by Wednesday and a decision will be adopted by Friday, Mogherini who was appointed by EU leaders to become the next High Representative for Foreign Affairs and Security Policy on Saturday, said at a news conference in the European Parliament.

"We speak about an aggression," she said. "I think that we need to respond in the strongest possible way to that."

She added  the sanctions would be in the four areas targeted by earlier rounds of sanctions: financial sanctions, defence, technology and dual-use materials.

Mogherini declined to give details but on Monday Reuters quoted three sources close to the discussions as saying the new round of sanctions could include banning Europeans from buying new Russian government bonds, thus curbing Moscow's ability to raise fresh funding abroad.

US and EU sanctions that have steadily tightened since March have already made it hard for many Russian companies to borrow, scaring investors and contributing to capital flight that has hurt the Russian economy.

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