EU leaders decided at a summit on Saturday that the direct engagement of Russian troops in the war in eastern and southern Ukraine - still denied by Moscow - called for a stepping up of sanctions imposed so far unless Russia pulled its soldiers back.
German Chancellor Angela Merkel, who led the drive for a tougher EU response, said on Monday that Moscow's behavior in Ukraine must not go unanswered, even if sanctions hurt the German economy, heavily dependent on imported Russian gas.
"I have said that (sanctions) can have an impact, also for German companies," Merkel told a news conference in Berlin.
"But I have to say there is also an impact when you are allowed to move borders in Europe and attack other countries with your troops," she said. "Accepting Russia's behavior is not an option. And therefore it was necessary to prepare further sanctions."
The leaders asked the executive European Commission to prepare further measures within a week, building on steps taken at the end of July, which targeted the energy, banking and defense sectors.
"I'm hearing that a ban on buying Russian government bonds could be in the next package," an EU official familiar with the preparations said.