* Five Western leaders agree wider sanctions on Russia
* Measures to target financial, defence and energy sectors
* Russia says sanctions will not work
* Investigators say fighting is blocking their inquiry
* Ukraine says black boxes confirm missile downed MH17
(Releads with Western leaders)
By Gabriela Baczynska and Aleksandar Vasovic
KIEV/DONETSK, Ukraine, July 28 U.S. and European
leaders agreed on Monday to impose wider sanctions on Russia's
financial, defence and energy sectors as Ukraine said its forces
advanced towards the crash site of Malaysian flight MH17.
The new sanctions, which U.S. President Barack Obama and
leaders of Germany, Britain, France and Italy discussed in a
conference call, are aimed at increasing the pressure on Russian
President Vladimir Putin after the Malaysian airliner was shot
down over territory held by pro-Moscow rebels in eastern
"It's precisely because we've not yet seen a strategic turn
from Putin that we believe it's absolutely essential to take
additional measures and that's what the Europeans and the United
States intend to do this week," said Tony Blinken, a national
security adviser to Obama.
The crash earlier this month has led to calls for much
tougher action against Russia from Western countries who had
previously imposed sanctions but only on small numbers of
individuals and firms.
EU member states were expected to try to reach a final deal
on Tuesday on stronger measures that would include closing the
bloc's capital markets to Russian state banks, an embargo on
future arms sales and restrictions on energy technology and
technology that could be used for defence.
In Brussels, EU sources said diplomats had reached
preliminary agreement on a new list of companies and people,
including associates of Putin, to be targeted by asset freezes.
Western states believe that the rebels brought down Malaysia
Airlines flight MH17, with the loss of 298 lives, using a
missile supplied by Russia.
"The latest information from the region suggests that even
since MH17 was shot down, Russia continues to transfer weapons
across the border and to provide practical support to the
separatists," said a statement issued by British Prime Minister
David Cameron after the leaders' call.
"Leaders agreed that the international community should
therefore impose further costs on Russia and specifically that
ambassadors from across the EU should agree a strong package of
sectoral sanctions as swiftly as possible."
Russia has blamed the Ukrainian military for the tragedy,
which deepened a crisis that erupted when a pro-Moscow Ukrainian
president was forced from power and Russia annexed Crimea in
Earlier in the day, Russian Foreign Minister Sergei Lavrov
said sanctions imposed by the United States and the EU on
officials and companies would not achieve their goal.
"We will overcome any difficulties that may arise in certain
areas of the economy, and maybe we will become more independent
and more confident in our own strength," he told a news
GOVERNMENT FORCES ADVANCE
The Ukrainian government said on Monday its troops had
wrested more territory from the rebels and were moving towards
the crash site which international investigators said they could
not reach because of the fighting.
Troops recaptured two rebel-held towns near the site and
were trying to take the village of Snezhnoye, near where Kiev
and Washington say rebels fired the surface-to-air missile that
shot down the airliner, Ukrainian officials said.
One pro-government militia said 23 of its men had been
killed in fighting in the past 24 hours, while a rebel commander
said he had lost 30 soldiers.
Analysis of black box flight recorders from the airliner
showed it was destroyed by shrapnel from a missile blast which
caused a "massive explosive decompression", a Ukrainian official
said on Monday.
Investigators in Britain, who downloaded the data, had no
comment. They said they had passed information to the
international crash investigation led by the Netherlands, whose
nationals accounted for two-thirds of the victims.
In a report on three months of fighting between government
forces and separatist rebels who have set up pro-Russian
"republics" in the east, the United Nations said more than 1,100
people had been killed.
U.N. High Commissioner for Human Rights Navi Pillay said
increasingly intense fighting in the Donetsk and Luhansk regions
was extremely alarming and the shooting down of the airliner on
July 17 may amount to a war crime.
The separatists are still in control of the area where the
plane was shot down but fighting in the surrounding countryside
has been heavy as government forces try to drive them out.
On Monday at least three civilians were reported killed in
overnight fighting, and Kiev said its troops recaptured Savur
Mogila, a strategic piece of high ground about 30 km (20 miles)
from where the Boeing hit the ground, and other areas under
rebel control. Rebels denied Savur Mogila had been lost, saying
fighting was continuing.
The crash site has yet to be secured or thoroughly
investigated, more than 10 days after the crash. After days in
which bodies lay untended in the sun, rebels gathered the human
remains and shipped the bodies out, and turned over the flight
recorders to a Malaysian delegation.
But the wreckage itself is still largely unguarded, and much
of it has been moved or dismantled in what the rebels say was
part of the operation to recover the bodies. No full forensic
sweep has been conducted to ensure all human remains have been
collected. Both side accuse the other of using fighting to
prevent the investigation.
The Organization for Security and Co-operation in Europe
said its observers attempting to reach the crash site with
investigators from Australia and the Netherlands were forced to
return to Donetsk for "security reasons".
A rebel leader, Vladimir Antyufeyev, told reporters in
Donetsk that separatist fighters escorting the international
experts to the site encountered fighting and turned back.
Antyufeyev, who like most of the senior rebel leadership is
an outsider from Russia, also blamed the "senseless" Ukrainian
army for trying to destroy evidence at the crash site under
cover of fighting.
(Additional reporting by Roberta Rampton and Steve Holland in
Washington, Natalia Zinets in Kiev, Justyna Pawlak, Barbara
Lewis and Tom Koerkemeier in Brussels, Jane Wardell in Sydney,
Alexei Anishchuk and Thomas Grove in Moscow, William James in
London, and Anthony Deutsch in Amsterdam; Writing by Giles
Elgood and David Stamp; Editing by Peter Graff)