Ukraine’s government has said a Russian air force jet shot down a Ukrainian warplane over its territory last night.
"A military plane from the air force of the Russian Federation carried out a rocket strike on a Ukrainian airforce SU-25 as it fulfilled its task over the territory of Ukraine," Ukraine's National Security and Defence Council said on Twitter.
It added that the pilot had ejected from the plane.
Russia's UN Ambassador Vitaly Churkin said that Russia did not shoot down the plane.
It was the first time Ukraine had directly accused Russia of using air power in the war.
Russia says it does not want war with its "brotherly nation" Ukraine, adding it only sees a political solution to the conflict there.
Earlier, Russian Prime Minister Dmitry Medvedev said new Western sanctions on Moscow over its role in the Ukraine crisis were "evil" and that such measures could never bring anyone to their knees.
Mr Medvedev told a government meeting moves by the United States and the European Union would not help Ukraine and would fuel anti-US sentiment in Russia.
He added that Russia should now pay more attention to defence spending.
Earlier, Russian Deputy Prime Minister Dmitry Rogozin said new US sanctions on some Russian companies were illegal.
"The US sanctions against leading Russian defence companies are illegal and show only unfair competition," he was quoted as saying by RIA news agency.
The chief executive of Russia's VTB bank said the US sanctions imposed on Russia over the crisis in Ukraine were inappropriate.
Andrei Kostin warned of potentially devastating consequences for the global financial system.
"Of course, these sanctions are inappropriate and of course they do not correspond to the spirit or the legal standards of existing international relations, in particular in the field of finance and banking," Mr Kostin was quoted as saying by Itar-Tass news agency.
VTB is Russia's second largest bank.
"I believe that if we do not take measures to stop such unilateral actions, we could see devastating consequences for the global financial system," Mr Kostin said.
Russian President Vladimir Putin last night warned that the US sanctions will take relations with Russia to a "dead end".
Speaking to reporters on a visit to Brazil, Mr Putin said he needed to see the details of the sanctions to understand their full scope.
US President Barack Obama imposed the toughest US sanctions yet on Russia, hitting Mr Putin's powerbase by targeting companies close to him.
By imposing penalties on Russia's largest oil producer Rosneft, its second largest gas producer Novatek and its third largest bank Gazprombank, Washington targeted Mr Putin's allies, many of whom have become wealthy during his tenure.
The sanctions, which in effect close medium- and long-term dollar funding, were also put on Vnesheconombank, VEB, which acts as payment agent for the government, and eight arms firms, including the producer of the Kalashnikov assault rifle.
However, the sanctions did not freeze the big companies' assets, close off the short-term funding they need for day-to-day operations, or stop US firms doing business with them.
Several were quick to say it was business as usual. But Russia's rouble-traded stock market and the rouble tumbled on opening.
The measures mean that the US has moved far further to punish Russia than its EU allies, who collectively do ten times as much trade with Russia as the United States and depend on Russia for natural gas.
Nevertheless, the European Union also said it was imposing new sanctions and would draw up a list of targets by the end of the month. It will block new loans to Russia through two development banks.
Russia said the European Union had "succumbed to the blackmail of the US administration" to follow the US in imposing sanctions.
The sanctions show a new willingness to act by Western countries over a crisis that has escalated in recent weeks.
Hundreds of people have died in fighting between Ukrainian troops and heavily armed pro-Russian separatists who have declared independent "People's Republics" in two provinces.
Russia denies supporting the rebellion, but many of the separatist fighters and their main leaders are from Russia.
UEFA to prevent Russian-Ukrainian clashes
European football's governing body UEFA will prevent Ukrainian and Russian clubs from facing each other in the Champions League, due to security fears.
UEFA said that its emergency panel had made the decision at the request of the football associations of both Ukraine and Russia, ahead of Friday's draw for the third qualifying round of the tournament.