Ukraine has declared a state of emergency and told its citizens in Russia to flee while Russia began evacuating its Kyiv embassy in the latest ominous signs for Ukrainians who fear an all-out Russian military onslaught.

Shelling intensified at the line of contact in eastern Ukraine, where Russian President Vladimir Putin recognised the independence of two rebel regions this week and has ordered the deployment of Russian troops as “peacekeepers”.

But there was still no clear indication of whether he plans to follow that up with a massed assault on Ukraine involving the tens of thousands of troops he has gathered near his neighbour’s borders.

The uncertainty and a mostly incremental first volley of sanctions on Russian interests by the US and its allies have roiled financial markets. 

“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.

The 30-day state of emergency could restrict the freedom of movement of conscripted reservists, impose curbs on the media and lead to personal document checks, according to a draft text that needs to be approved by parliament.

The restrictions would come into force from Thursday.

The Ukrainian government has also announced compulsory military service for all men of fighting age.

Ukrainian government and state websites, which have experienced outages in recent weeks blamed by Kyiv officials on cyber attacks, were again offline on Wednesday. 

Ukraine’s parliament, cabinet and foreign ministry websites were affected.

Russia 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 leave for safety reasons.

The US has described Russia’s actions as the start of an “invasion” but along with allies, has so far unveiled mostly incremental sanctions while making clear they were keeping tougher measures in reserve in case of a full-scale invasion.

European Union sanctions approved on Wednesday will add all members of Russia’s lower house of parliament who voted to recognise the separatist regions in Ukraine to a blacklist, freezing their assets and banning travel.

EU leaders will also hold an emergency summit on Thursday to discuss what to do next.

The Russian-backed leader of the breakaway Donetsk region said on Wednesday he wanted to peacefully settle its borders with Ukraine but reserved the right to ask Russia for help.

Meanwhile, Zelenskiy said his country wanted security guarantees from Russia as a step towards ending the stand-off between the two countries.

“I believe that Russia should be among those countries that provide clear security guarantees. I have many times suggested that the president of Russia sit down at the negotiating table and speak,” Zelenskiy said during a briefing with his Polish and Lithuanian counterparts.

Denis Pushilin, who heads the self-proclaimed Donetsk People’s Republic that was recognised by Russia this week, said he favoured dialogue with Ukraine in the first instance.

But he told a news conference the situation in their long-running conflict had become critical and the separatists would win with support from “big Russia”.

Russia’s recognition of Donetsk and the neighbouring self-proclaimed Lugansk People’s Republic on Monday was declared illegal by the US and many of its allies.

“Aggression from the Ukrainian side is growing,” Pushilin said, accusing officials in Kyiv of staging “provocations” and causing civilian casualties.

Ukraine denies accusations by the separatists that it is stoking the conflict with the aim of recapturing their territory by force.

Pushilin said a relocation of women and children which began last week was necessary to enable the separatist army to focus on defending the borders of their territory.

The UK announced restrictions banning Russia from the issuing of new bonds in its security markets and called for its broadcasting regulator to investigate Russia’s RT international TV news channel as a propaganda outlet.

“There will be even more tough sanctions on key oligarchs, on key organisations in Russia, limiting Russia’s access to the financial markets, if there is a full scale invasion of Ukraine,” UK Foreign Secretary Liz Truss said.

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 over the previous 24 hours.

US Secretary of State Antony Blinken and French Foreign Minister Jean-Yves Le Drian cancelled separate meetings with Russian Foreign Minister Sergei Lavrov while a summit between US President Joe Biden and Putin, floated by France at the start of the week, now seems unlikely.

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”.

By Pavel Polityuk and Polina Nikolskaya in KYIV/DONETSK

Get all the latest Canberra news, sport, entertainment, lifestyle, competitions and more delivered straight to your inbox with the Canberra Daily Daily Newsletter. Sign up here.