The United States froze assets and imposed visa bans on seven powerful Russians close to President Vladimir Putin on Monday and also sanctioned 17 companies in reprisal for Moscow's actions in Ukraine.
President Barack Obama said the moves, which add to measures taken when Russia annexed Crimea last month, were to stop Putin fomenting rebellion in eastern Ukraine. Obama added he was holding broader measures against Russia's economy "in reserve".
Among those sanctioned were Igor Sechin, head of state energy firm Rosneft, and Deputy Prime Minister Dmitry Kozak. A Russian deputy foreign minister was quoted as expressing "disgust" at the White House announcement.
The European Union, with more to lose than Washington from sanctions against Russia, a major energy supplier and trading partner for the EU, is also expected to announce new penalties after member governments reached a deal, diplomats said.
The United States will deny export licenses for any high-technology items that could contribute to Russian military capabilities and will revoke any existing export licenses that meet these conditions, the White House said.
It was the third round of sanctions that the United States has imposed over Crime and troop build-up on the border. All the sanctions have been aimed at individuals and businesses.
"Russia's involvement in the recent violence in eastern Ukraine is indisputable," a White House statement said.
Moscow insists that a rebellion among Russian-speakers in the east against the Kiev authorities which took power after the overthrow of a Kremlin-backed president in February is a home-grown response to a coup and denies having forces on the ground.
In eastern Ukraine on Monday, pro-Moscow rebels showed no sign of curbing their uprising, seizing public buildings in another town in the east, Kostyantynivka. The high-profile pro-Russian mayor of another eastern city Kharkiv, Ukraine's second biggest, was fighting for life after being shot while out bicycling.
Germany demanded Russia act to help secure the release of seven unarmed European military monitors, including four Germans, who have been held by the rebels since Friday.
U.S. officials had said the new list would include Putin's "cronies" in the hope of changing his behavior.
Obama said: "The goal is not to go after Mr. Putin personally. The goal is to change his calculus with respect to how the current actions that he's engaging in Ukraine could have an adverse impact on the Russian economy over the long haul.
"To encourage him to actually walk the walk and not just talk the talk when it comes to diplomatically resolving the crisis in Ukraine."
Nevertheless, such measures have done nothing so far to deter Putin, who overturned decades of post-Cold War diplomacy last month to seize and annex Ukraine's Crimea peninsula and has since massed tens of thousands of troops on the frontier. He acted after Ukraine's elected president was ousted in February by pro-Western protesters demanding closer links with Europe.
Moscow has in the past shrugged off targeted sanctions like those Obama announced on Monday as pointless.
Rebels take town
The rebels took another town on Monday morning, seizing the police headquarters and municipal administration building in Kostyantynivka, an industrial city in the eastern Donetsk region. Separatists in the province have proclaimed an independent "People's Republic of Donetsk".
Reuters journalists at the scene saw about 20 gunmen controlling the administration building.
The pro-Russian mayor of Kharkiv, Gennady Kernes, 54, was shot in the back while riding his bicycle, probably by someone hidden in nearby woods, said Iryna Kushchenko, spokeswoman for the local government. His bodyguards were following in a car but were not close enough to intervene, she said.
The Interior Ministry said was being operated on and that his condition was "serious".
On Sunday, the separatist rebels paraded eight unarmed European military monitors before journalists. One, a Swede who is diabetic, was freed for medical reasons but four Germans, a Czech, a Dane and a Pole are still being held, described by the rebel leader as "prisoners of war" and NATO spies.
German Chancellor Angela Merkel's spokesman Steffen Siebert said they were held "against the law and without justification".
"We ask the Russian government to act publicly and internally for their release, to distance itself clearly from such acts and to use its influence on pro-Russian perpetrators and forces in eastern Ukraine to secure their release."
Armed rebels also occupied Donetsk television on Sunday and ordered it to start broadcasting Russian state TV.
Obama is under pressure from opposition Republicans at home to move faster on sanctions. But in taking what he described as "calibrated steps", he has emphasized the need to act in concert with European countries, which have more at stake economically and a more cumbersome process for taking decisions.
The EU does more than 10 times as much trade with Russia as the United States and buys a quarter of its natural gas from Moscow. Most EU decisions require unanimity among member states.
Western countries say the targeted sanctions are already having an effect on Russia by scaring investors into pulling out capital. The central bank has been forced to hike interest rates to prop up the ruble and Russian firms are finding it more difficult and costly to raise funds.
Shares in Rosneft fell after the sanctions move against Sechin although the broader market and the ruble rose.