Russia has launched fresh war games involving S-300 surface-to-air missiles on its southern flank as Ukraine demanded that Moscow explain separate three-day drills close to the border.

The war games involving S-300 missiles, SU-24 attack aircraft and MiG-31 supersonic interceptor jets are taking place in the southern Astrakhan region and will end on Friday, a spokesman for the Central military district told AFP on Thursday.

NATO is not ready to deal with a military attack by Russia on a member state and must adjust to the unconventional tactics seen in Ukraine, British lawmakers warned Thursday.

The conflict in eastern Ukraine was a "wake-up call" for the 28-nation alliance, which had become complacent, Britain's parliamentary defense committee said in a report.

The European Union on Wednesday imposed an asset freeze and travel ban against two close associates of President Vladimir Putin, also the leading shareholders in Bank Rossiya servicing senior Russian officials.

The EU's Official Journal listed eight people and three firms hit by an asset freeze and travel ban over the Ukraine crisis, including Yuriy Valentinovich Kovalchuk, chairman and leading shareholder of the bank, and Nicolay Terentievich Shamalov, second largest stakeholder in the institution considered the personal bank of senior Russian Federation officials.

NATO's top commander said Wednesday that Russia was "increasing" the number of troops and weaponry along the border with Ukraine.

"The number of troops along the (Ukrainian) border is increasing. It is well over 12,000," General Philip Breedlove told reporters at the end of his one day visit to Kosovo, where he inspected the alliance's peacekeeping mission.

Australia's priority was gaining access to the crash site of downed Flight MH17 in Ukraine, not imposing sanctions on Russia, Prime Minister Tony Abbott said Wednesday.

The United States and Europe announced tough new sanctions targeting Russia's key financial, arms and energy sectors on Tuesday in response to Moscow's intervention in the Ukraine crisis.

Ratcheting up tensions with Moscow, Washington on Tuesday urged Russia to destroy prohibited weapons after it accused Russian leaders of flouting a 1987 treaty banning medium-range cruise missiles.

A 2014 report submitted to Congress on compliance with arms control and non-proliferation accords found Russia was "in violation of its obligations under the Intermediate-Range Nuclear Forces Treaty (INF)," State Department spokeswoman Jen Psaki told reporters.

Russia criticized Tuesday a U.N. report on the human rights situation in eastern Ukraine as "biased" and "hypocritical".

"Our main conclusion is that the report is biased and even hypocritical," Foreign Ministry spokesman Alexander Lukashevich said in a statement.

Seventeen people, including three children, were killed in the past 24 hours by shelling in Ukraine's rebel-held stronghold of Gorlivka, local Ukrainian officials said on Tuesday.

A statement said that 43 people were also wounded in the city which was observing three days of mourning for 13 civilians including 2 children killed on Sunday by Grad rockets.

Observers from the Organization for Security and Cooperation in Europe were set to arrive in southern Russia Tuesday on their mission to monitor two border crossings with rebel-held Ukraine, the OSCE said.

The first members of the team of 16 civilian monitors were due to arrive in Russia's Rostov region where they were expected to hold meetings with officials from the regional administration, border guards and customs service, said OSCE spokeswoman Tatyana Baeva.

The United States has found that Russia violated a 1987 arms control treaty by testing a ground-launched cruise missile, a senior U.S. official said late Monday, calling the matter "very serious." 

The finding comes in a 2014 report that concluded Russia was in violation of the Intermediate-Range Nuclear Forces Treaty, which barred it from possessing, producing or flight-testing such cruise missiles with a range of 500 to 5,500 kilometers, the official told Agence France Presse.