Russia says it has expanded sanctions against the US and Canada

Update: Moscow has retaliated against sanctions imposed by the United States and Canada last month by expanding its lists of American and Canadian officials barred from Russia, but will not name those affected, the Foreign Ministry said on Thursday.

"Sanctions are not our method in general, but unfriendly actions force us to respond. The most recent sanctions (imposed by) Washington and Ottawa are no exception," ministry spokesman Alexander Lukashevich said in a statement.

On April 28, the United States slapped visa bans and asset freezes on seven Russian officials close to President Vladimir Putin and imposed sanctions on 17 companies, saying Moscow had failed to abide by an agreement to defuse the crisis in Ukraine.

Pro-Russian separatists in eastern Ukraine ignored a public call by Russian President Vladimir Putin to postpone a referendum on independence, declaring they would go ahead on May 11 with a vote that could lead to war.

Denis Pushilin, a leader of the self-declared separatist Donetsk People's Republic, said on Thursday that the "People's Council" had voted unanimously to hold the plebiscite as planned.

"Civil war has already begun. The referendum can put a stop to it and start a political process," he told reporters.

The announcement coincided with a sharp change of tone from Moscow, which had signaled a pullback from confrontation on Wednesday with Putin's call for the vote to be delayed and a declaration that troops were withdrawing from Ukraine's border.

Russian markets sank on the news, and in Kyiv, officials promised to press on with their "anti-terrorist campaign" to retake control over the eastern regions of Donetsk and Luhansk regardless of the rebels' decision on the vote.

Political analysts said Putin may have expected the rebels to go ahead with the referendum, showing that they were not under his orders. By distancing himself from a process that will not be recognized by the West Putin may also be hoping to avoid further sanctions as their effect begins to be felt in Russia.

Russia's defense ministry said NATO and the United States, which both said they had seen no sign of a Russian withdrawal, were misleading the world about the armed confrontation between Moscow and Kyiv. It said the pro-Western Ukrainian government had assembled 15,000 troops on its border with Russia.

NATO has accused Moscow of using special forces in the separatist takeover of mainly Russian speaking eastern Ukraine after annexing Crimea from Ukraine in March. Russia admitted its troops had been active in Crimea after initially denying any role there but says it is not involved in eastern Ukraine.

The ministry said it had asked the West to stop "cynically misinforming" the international community.

Putin to visit France?

The rebel decision to go ahead with the referendum appeared to have wrong-footed the West.

The European Union said shortly before the announcement that it was waiting to see whether Putin's words would be followed by deeds and that the plebiscite "would have no democratic legitimacy and could only further worsen the situation."

At the same time, the Russian ambassador to Paris said Putin, who had been shunned by Western leaders since the Crimean takeover, would join them in a ceremony to mark the 70th anniversary of the Normandy landings in World War Two.

The referendum has become seen as a vital step by many in Ukraine's industrial east, fired up over what the rebels, and Moscow, call the "fascist" government in Kyiv.

Putin's call for its postponement was intended to open the way to negotiations on cooling down a crisis that has led to dozens of deaths in clashes between troops and separatists in eastern Ukraine and rival groups in the southern port of Odessa.

Putin said on Thursday it was Kyiv's "irresponsible politics" that had caused the crisis.

Maria Lipman, an expert at the Carnegie Center think-tank in Moscow, said Putin would have known know that his request for the referendum to be postponed would be rebuffed.

"But this can be used to show that the people in Ukraine's east are not Russians, take no orders from Russia, that Russia exercises no control over them because they only do what they want to do," she said.

"He has also distanced Russia from the referendum, which has a completely unclear status and will not be recognized by the West."

Artyom, a rebel at a roadblock in the rebel-held eastern town of Slaviansk, said of the referendum decision: "This is great news. We need to have our say."

In a further shift towards a confrontational stance, Putin oversaw test launches of military rockets during training exercises held across Russia on Thursday, the day before celebrations of the anniversary of its World War Two victory.

The West has accused Russia of using previous military exercises to build up forces along the border with Ukraine after the ousting of former Moscow-backed president Viktor Yanukovych in February.

(Additional reporting by Alexandra Prentice in Slaviansk, Vladimir Soldatkin and Thomas Grove in Moscow, Lionel Laurent in Paris, Adrian Croft in Brussels; writing by Philippa Fletcher; editing by Giles Elgood)