EU votes to extend Russia sanctions

European foreign ministers agreed on Monday to extend economic sanctions on Russia -- introduced in response to Moscow's "deliberate destabilization" of Ukraine and "illegal annexation" of Crimea -- until 31 January 2016.

The decision was ratified on Monday and gives the region more time to see whether Russia will implement its side of a ceasefire and peace plan with Ukraine, where it is accused of supporting a pro-Russian uprising in the east of the country, although it denies the charge.

A Kremlin spokesman said the sanctions were unfounded and that Russia was sticking to its policy of reciprocity, Reuters reported – that is, its own retaliatory ban on European imports.

In March, European leaders agreed to link the duration of these sanctions to the complete implementation of a ceasefire between Ukraine and Russia, called the "the Minsk agreements," by the end of the year.

However, there has recently been an uptick in violence in the region, raising fears that the fragile ceasefire hangs in the balance.

Banks hit

Among the targets were Russian bank branches in the Ukraine capital, Kiev. Two Sberbank branches were hit by explosions late Sunday, the bank confirmed, although there were no casualties.

In a statement sent to CNBC, Sberbank said that buildings were "fractionally damaged," and that both branches were operating normally Monday morning.

Sberbank -- which is majority owned by the Russian Central bank -- currently operates 176 branches in Ukraine.

Sanctions imposed

Europe's restrictive measures were imposed in July 2014 on Russia and were reinforced in September 2014. They target certain exchanges with Russia in the financial, energy and defense sectors and trade of goods and largely restricted Russia's access to EU capital markets.

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Shanghai aerial view
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Shanghai aerial view

Five major state-owned banks, three Russian energy companies and three major defense companies were particularly targeted by the sanctions, hitting them and the wider economy hard. Partly as a result of sanctions and the lower oil price, Russia's economy is expected to shrink by 3.5 percent in 2015, according to forecasts from the International Monetary Fund (IMF).

In a statement detailing the sanctions, the European Council said it remained "ready to reverse its decisions and re-engage with Russia when it starts contributing actively and without ambiguities to finding a solution to the Ukrainian crisis."

David Buxton, the chief executive of Arachnys, which helps companies perform due diligence in emerging markets like Russia, said in a note that businesses would have to decide whether to continue doing business in Russia.

Read MoreHas Russia just earned itself more sanctions?

"Foreign companies doing business in Russia will now be faced with a choice: conform with the sanctions, but continue doing business where allowed and conduct more substantive investigations as part of their due diligence; or de-risk completely by getting out of the Russian market. "

"In this sense, extending the sanctions will undoubtedly place Russia under more sustained pressure, particularly at this difficult time for its economy, ahead of December's deadline for the full implementation of the Minsk ceasefire," he said in a note Friday.

- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt. Follow us on Twitter: @CNBCWorld