European Union sanctions against Russia were meant as a "strong warning" that Russia's actions in Ukraine, according to Europe's top two officials.
In a joint statement the president of the European Commission, Jose Manuel Barroso, and European Council President Herman Van Rompuy said: "The European Union will fulfill its obligations to protect and ensure the security of its citizens. And the European Union will stand by its neighbours and partners."
The measures will shut major state-owned Russian banks out of European capital markets and target the defence sector and sensitive technologies, including oil. But they will exclude the vital gas sector, on which Europe is heavily dependent.
Barroso and Van Rompuy also warned that they would bring "heavy costs" to Russia's economy.
Apart from agreeing on the economic measures, ambassadors also signed off on a new list of Putin's associates and companies that will face asset freezes and visa bans under previous measures.
Eight more officials including four members of the Russian leader's inner circle, are also expected to be added the current list of 87.
The sanctions will initially last a year but will be reviewed after three months on Oct. 31 to determine their impact on Moscow's behaviour, diplomats said
The EU does more than 10 times as much trade with Russia as the United States.