EU orders preparation of 'urgent' Russia sanctions as Ukraine troops give more ground

NEWYou can now listen to Fox News articles!

European Union leaders stopped short of imposing new economic sanctions on Russia in response to the latest developments in Ukraine early Sunday, instead tasking the organization's executive body to "urgently" prepare tougher economic sanctions that could be adopted within a week after Ukraine's president warned of a possible "full-scale war" in eastern Europe.

The 28 leaders of E.U. member countries also issued a statement calling on Russia to "immediately withdraw all its military assets and forces from Ukraine."

In recent days, a new advance by Moscow-backed separatist rebels has resulted in the seizure of the coastal town of Novoazovsk, stoking fears that the larger port of Mariupol would be the next target.

The offensive appears to have succeeded in relieving some of the pressure on the rebel-held cities of Donetsk and Luhansk, which had been surrounded by government troops in recent weeks. Ukraine military spokesman Col. Andriy Lysenko said Saturday that troops were abandoning the town of of Ilovaysk, about 15 miles east of  Donetsk, where its forces had been surrounded by rebels for days.

"We are surrendering this city," Ukraine's Lysenko told reporters. "Our task now is to evacuate our military with the least possible losses in order to regroup." He said that regular units of the military had been ordered to retreat from Novosvitlivka and Khryashchuvate, two towns on the main road between the Russian border and Luhansk. Ukraine had claimed control of Novosvitlivka earlier in August.

NATO said this week that at least 1,000 Russian soldiers are in Ukraine. Russia denies that. NATO also says Russia has amassed some 20,000 troops just across Ukraine's eastern border, which could rapidly carry out a full-scale invasion. Russia has said that it has no intention of invading Ukraine and has also repeatedly denied Ukrainian accusations that it is providing weapons and training to the separatists.

Several European leaders had called for additional sanctions at the outset of the meeting in Brussels, but the fear of an economic backlash apparently prevailed and led the bloc to grant Russia another chance at avoiding tougher action. New sanctions would have required unanimity among the leaders. Russia is the E.U.'s No. 3 trading partner and one of its biggest oil and gas suppliers. The E.U., in turn, is Russia's biggest commercial partner, making any sanctions more biting than similar measures adopted by the U.S.

The U.S. and the E.U. have so far imposed sanctions against dozens of Russian officials, several companies as well as the country's financial and arms industry. Moscow has retaliated by banning food imports.

German Chancellor Angela Merkel said the new sanctions would target the same sectors as previous punitive measures, which also included an export ban for some high technology and oil exploration equipment.

Ukrainian President Petro Poroshenko, who briefed the leaders at the beginning of their talks, said a strong response was needed to the "military aggression and terror" facing his country. Efforts to halt the violence in eastern Ukraine were "very close to a point of no return."

"Thousands of the foreign troops and hundreds of the foreign tanks are now on the territory of Ukraine," Poroshenko told reporters in English. "There is a very high risk not only for peace and stability for Ukraine, but for the whole ... of Europe."

European leaders also issued dire warnings, reflecting their concern over the most recent military escalation with the opening of a new front by the Russian-backed rebels in southeastern Ukraine.

Lithuanian President Dalia Grybauskaite said Russia's meddling in Ukraine, which seeks closer ties with the E.U., amounts to a direct confrontation that requires stronger sanctions.

"Russia is practically in the war against Europe," she said in English.

Grybauskaite said the E.U. should impose a full arms embargo, including the canceling of already agreed contracts, but France has so far staunchly opposed that proposal because it has a $1.6 billion contract to build Mistral helicopter carriers for Russia.

British Prime Minister David Cameron also warned that Europe shouldn't be complacent about Russian troops on Ukrainian soil.

"Countries in Europe shouldn't have to think long before realizing just how unacceptable that is," he said. "We know that from our history. So consequences must follow."

The Associated Press contributed to this report.