EU leaders agree on new sanctions if Russia invades Ukraine

"Any further military aggression against Ukraine will have massive consequences and severe cost in response, including restrictive measures coordinated with partners," leaders said in their final summit statement.

Leaders also said the EU "encourages diplomatic efforts and supports the Normandy format in achieving the full implementation of the Minsk Agreements," referring to 2014-2015 peace deals agreed with Germany, France, Ukraine and Russia.

EU leaders did not lay out the specific sanctions they might take, as member states have been divided over whether highlighting specific measures would act as a deterrent, and what those actions should actually be.

Russia was hit by economic sanction in 2014 over its annexation of the Crimean peninsula in Ukraine, with measures targeting Russia's energy, banking, and defence sectors.

New measures could include targeting Russian oligarchs, banning EU transactions with Russian banks, and possibly cutting off Russian banks from the international money transfer system, SWIFT.

Washington said Russia has amassed more than 100,000 troops on Ukraine's borders, possibly for an invasion. Moscow said it has a right to move its troops around its own territory, and denies any plans to invade.

However, on Wednesday Moscow handed proposals to the US that Nato should not expand eastwards.

Nato secretary-general Jens Stoltenberg said on Thursday Russia was increasing, not reducing, its troops on the border, Reuters reported.

A statement by Nato said that the allies "support the right of all countries to decide their own future and foreign policy free from outside interference."

"Unfortunately, we see the concentration, reinforcement of Russian military forces along the Ukrainian border and probably we face the most dangerous situation in the last 30 years," Lithuanian president Gitanas Nauseda said before the meeting of EU leaders.

"I am talking not only about Ukraine, but I'm talking about the eastern flank of Nato, about the Baltic region," he added.

EU Commission president Ursula von der Leyen said the executive has been working on different sanction options since June, and there has been ongoing coordination with the US.

"We want good relations with Moscow, but it is on the to deescalate, and make a choice, In case of further escalation, we are prepared," she said.