Ukraine said Russia was building up armoured vehicles on its side of a narrow stretch of water closest to Crimea after Putin declared at the weekend he had the right to invade his neighbour to protect Russian interests and citizens.
(Read more: Why Crimea matters)
On the ground in Perevalnoye, half way between the Crimean capital of Simferopol and the Black Sea, hundreds of Russian troops in trucks and armoured vehicles - without national insignia on their uniforms - surrounded two military compounds, confining Ukrainian soldiers as virtual prisoners.
Ukraine called up reservists on Sunday and the United States threatened to isolate Russia economically after Putin's action provoked what Britain's foreign minister called ``the biggest crisis in Europe in the twenty-first century''.
European Union foreign ministers were to hold emergency talks on Ukraine on Monday but diplomats said they would not immediately match U.S. threats of sanctions against Moscow, but would focus on diplomatic efforts to prevent escalation.
The Organisation for Security and Cooperation in Europe (OSCE) said it was trying to convene an international contact group to help defuse the crisis after Germany said Chancellor Angela Merkel had convinced Putin to accept such an initiative.
Switzerland, which chairs the pan-European security body, said the contact group would support Ukraine during its transition and coordinate aid and could also discuss sending observers to monitor the rights of national minorities.
Markets tumble, Gazprom hit
The Russian central bank raised its key lending rate by 1.5 percentage points after the rouble fell to all-time lows against the dollar. The MICEX index of Moscow stocks tumbled 10 percent to 1,294 points. Russian gas monopoly Gazprom, which supplies Europe through Ukraine, was down more than 13 percent.
Gazprom's finance chief warned Ukraine that it may hike gas prices from next month, accusing Kiev of a patchy payments record, but said gas transit to Europe was normal.
Ukraine's Prime Minister Arseny Yatseniuk, head of a pro-Western government that took power when former president Viktor Yanukovich, a Russian ally, fled on Feb. 21 after three months of street protests against his rule, said Putin had effectively declared war on his country.
(Read more: Global tensions over Ukraine 'highest since 9/11')
Western leaders have reacted with a barrage of warnings to Putin against armed action, threatening economic and diplomatic consequences if Moscow goes further, but are not considering any military response.
A Ukrainian border guard spokesman said on Monday that Russian ships had been moving in and around the Crimean port city of Sevastopol, where the Russian Black Sea Fleet has a base, and that Russian forces had blocked mobile telephone services in some parts of Crimea.
He said Moscow was building up its armour near a ferry port on Russia's side of the 4.5 km (three mile) wide Kerch straight, which separates Crimea from Russia.