European leaders agreed on Wednesday to expand sanctions against Russia at a special meeting of the European Council in line with the actions of the United States.

An official statement after the meeting said the European Council agreed to expand the restrictive measures, with a view to targeting entities, including those from Russia.

A first list of entities and persons will be decided by the end of July.

The European Council condemned the continuation of illegal activities by armed militants in Eastern Ukraine in the statement.

Meanwhile, U.S. Department of the Treasury on Wednesday escalated sanctions against Russia over the Ukraine crisis, targeting a number of Russian banks as well as energy and defense firms, according to U.S. media.

The European Council also requested the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD) to suspend the new financing operations in the Russia.

"We believe that the Russian contribution to peace in Ukraine is not sufficient," Angela Merkel, German chancellor said on arrival for the meeting.

"There are important discussions here today and perhaps the most important is that the situation in Ukraine is not acceptable," British Prime Minister David Cameron said on his arrival.

"The territorial integrity of that country is not being respected by Russia and we need to send a clear message with clear actions at this council meeting tonight." he said.

EU decided to add 11 more people to its list of sanctions over Ukraine situation last week, bringing the number of people on its Ukraine-related blacklist to 72.