By Andrew Osborn and Dmitry Antonov

A Reuters witness saw tanks and other military hardware moving through the separatist-controlled city of Donetsk after Putin issued a decree recognising the breakaway regions and told Russia’s defence ministry to send in forces to “keep the peace”.

The moves drew U.S. and European condemnation and vows of new sanctions although it was unclear whether it was Putin’s first major step toward a full-scale offensive in Ukraine that Western governments have warned about for weeks.

A senior U.S. official said the deployment to breakaway enclaves already controlled by separatists loyal to Moscow did not yet constitute a “further invasion” that would trigger the harshest sanctions, but that a wider military campaign could come at any time.

There was no word on the size of the force Putin was dispatching, but the decree said Russia now had the right to build military bases in the breakaway regions.

In a lengthy televised address packed with grievances against the West, a visibly angry Putin described Ukraine as an integral part of Russia’s history and said eastern Ukraine was ancient Russian lands. Read full story.

Russian state television showed Putin, joined by Russia-backed separatist leaders, signing a decree recognising the independence of the two Ukrainian breakaway regions – the self-proclaimed Donetsk People’s Republic and the Lugansk People’s Republic – along with agreements on cooperation and friendship.

Defying Western warnings against such a move, Putin had announced his decision in phone calls to the leaders of Germany and France earlier, the Kremlin said.

Moscow’s action may well torpedo a last-minute bid for a summit with U.S. President Joe Biden to prevent Russia from invading Ukraine, which the senior U.S. official said was now in doubt.

Oil jumped to a seven-year high, safe-havens currencies like the yen rallied and U.S. stock futures dived as Europe’s eastern flank stood on the brink of war. Read full storyMKTS/GLOBRU/RUBO/R The rouble extended its losses as Putin spoke, at one point sliding beyond 80 per dollar. Read full story

Ukrainian President Volodymyr Zelenskiy, who received a solidarity call from Biden, accused Russia of wrecking peace talks and ruled out territorial concessions in an address to the nation early on Tuesday.

Biden, who also spoke to French President Emmanuel Macron and Germany Chancellor Olaf Scholz, quickly signed an executive order to halt all U.S. business activity in the breakaway regions and ban import of all goods from those areas.

White House spokesperson Jen Psaki said the measures were separate from sanctions the United States and its allies have been readying if Russia invades Ukraine.

U.S. Secretary of State Antony Blinken said the executive order “is designed to prevent Russia from profiting off of this blatant violation of international law.”

The U.N. Security Council was due to meet publicly on Ukraine at 9 p.m. EST Monday (0200 GMT on Tuesday), a Russian diplomat said, following a request by the United States, Britain and France. Read full story

German Chancellor Olaf Scholz’s spokesman said Germany, France and the United States had agreed to respond with sanctions, while British Foreign Minister Liz Truss said Britain would announce new sanctions on Tuesday.

NATO Secretary-General Jens Stoltenberg accused Russia of “trying to stage a pretext” for a further invasion. Russia annexed Crimea from Ukraine in 2014.

In his address, Putin delved into history as far back as the Ottoman empire and as recent as the tensions over NATO’s eastward expansion. His demands that Ukraine drop its long-term goal of joining the Atlantic military alliance have been repeatedly rebuffed by Kyiv and NATO states. Read full story

With his decision to recognise the breakaway regions, Putin brushed off Western warnings.

“I deem it necessary to make a decision that should have been made a long time ago – to immediately recognise the independence and sovereignty of the Donetsk People’s Republic and the Lugansk People’s Republic,” Putin said.

A French presidential official said the speech “mixed various considerations of a rigid and paranoid nature”.

DIPLOMATIC WINDOW NARROWS

Putin has for years worked to restore Russia’s influence over nations that emerged after the collapse of the Soviet Union, with Ukraine holding an important place in his ambitions.

Russia denies any plan to attack its neighbour, but it has threatened unspecified “military-technical” action unless it receives sweeping security guarantees, including a promise that Ukraine will never join NATO.

Recognition of the separatist-held areas will narrow the diplomatic options to avoid war, since it is an explicit rejection of a seven-year-old ceasefire mediated by France and Germany.

Separately, Moscow said Ukrainian military saboteurs had tried to enter Russian territory in armed vehicles leading to five deaths, an accusation dismissed as “fake news” by Kyiv.

Those developments fit a pattern repeatedly predicted by Western governments, who have accused Russia of preparing to fabricate a pretext to invade by blaming Kyiv for attacks and relying on pleas for help from separatist proxies.

Washington says Russia has massed a force numbering 169,000-190,000 troops in the region, including the separatists in the breakaway regions, and has warned of invasion at any moment.

(Reporting by Reuters bureaux; Writing by Matt Spetalnick, Kevin Liffey, Peter Graff, Frank Jack Daniel; Editing by Grant McCool and Stephen Coates)