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Ukraine Declares State Of Emergency As Tensions Rise With Russia

Ukraine has declared a state of emergency and told its citizens in Russia to immediately come home, while Moscow began evacuating its Kyiv embassy.

Shelling intensified at the line of contact in eastern Ukraine, where Russian President Vladimir Putin recognised the independence of two Moscow-backed rebel regions this week and has ordered the deployment of Russian forces as "peacekeepers".

Convoys of military equipment including nine tanks moved towards eastern Ukraine's Donetsk from the direction of the Russian border, a Reuters witness reported.

But there was still no clear indication of whether Putin will launch a massed assault on Ukraine with the tens of thousands of troops he has gathered near the border.

A US defence official said the Russian forces were "as ready as they can be" for an attack.

"Predicting what might be the next step of Russia, the separatists or the personal decisions of the Russian president - I cannot say," Ukraine's President Volodymyr Zelenskiy said.

That uncertainty and growing volley of sanctions on Russian interests by Washington and its allies have jolted financial markets, from oil and shares to wheat.

The rouble plunged around three per cent as the European Union blacklisted Russian lawmakers, freezing their assets and banning travel.

Washington targeted a major gas pipeline project from Russia, and London aimed for Russian debt.

Oil prices reversed their early losses on the day, while Wall Street slipped on news of Ukraine's emergency measures.

The 30-day state of emergency was approved by parliament on Wednesday. It restricts the freedom of movement of conscripted reservists, curbs the media and imposes personal document checks, according to a draft text. The restrictions come into force from Thursday.

Kyiv also announced compulsory military service for all men of fighting age.

Moscow denies planning an invasion and has described warnings as anti-Russian hysteria. But it has taken no steps to withdraw the troops deployed along Ukraine's frontiers.

On Wednesday, it took down flags from its embassy in Kyiv, having ordered its diplomats to evacuate for safety reasons.

Western countries have been warning for weeks about the possibility of the bloodiest war in Europe for decades. That has not materialised yet but the threat remains, leaving policymakers to struggle with calibrating their response.

Western leaders say tougher sanctions than so far unleashed are in reserve in case of a full-scale invasion, for example if Russia helps separatists seize parts of eastern Ukraine they claim but do not currently control.

The separatist leader of one breakaway region said on Wednesday that Ukrainian government forces should withdraw from such territory and take their weapons with them.

None of the sanctions so far directly targets Putin himself, or are expected to have serious consequences for Moscow, which is sitting on more than $US630 billion ($A871 billion) in international reserves.

Ukraine's military said one soldier had been killed and six wounded in increased shelling by pro-Russian separatists using heavy artillery, mortar bombs and Grad rocket systems in the two breakaway areas in the last 24 hours.

New satellite imagery showed several fresh troop and equipment deployments in western Russia and more than 100 vehicles at a small airfield in southern Belarus, which borders Ukraine, according to US firm Maxar.

For months, Russia has presented the crisis mainly as a dispute with the West, demanding security guarantees, including a promise never to allow Ukraine to join NATO.

But the recognition of the separatist regions was accompanied by much stronger language against Ukraine.

In a TV address on Monday, Putin characterised the Ukrainian state as an artificial construct wrongly carved out of Russia by its enemies.

Putin said he was always open to finding diplomatic solutions but that "the interests of Russia and the security of our citizens are unconditional for us".