Kiev accused Moscow on Friday of seeking to trigger a "third world war" as military tensions soared in east Ukraine.

Ramping up the Cold War-style rhetoric, Ukrainian Prime Minister Arseniy Yatsenyuk accused Russia of trying to spark a global conflict.

"The world hasn't forgotten the Second World War and Russia wants to start a third world war," he said.

"Russia's support for the terrorists in Ukraine constitutes an international crime and we call on the international community to unite against the Russian aggression."

U.S. Secretary of State John Kerry said the Kremlin was making an "expensive mistake" by meddling in Ukraine, stressing that further Western sanctions on Moscow were poised to be unveiled.

Moscow, Kerry said, was trying to "actively sabotage the democratic process through gross external intimidation", described the latest Russian drills as "threatening".

"Let me be clear: if Russia continues in this direction, it will not just be a grave mistake, it will be an expensive mistake," he said.

Standard and Poor's on Friday downgraded its credit rating on Russia to one notch above junk status, suggesting Moscow was already feeling the pinch of the sanctions threat.

Russia's central bank reacted by raising its key interest rate because of "the growing inflationary risks".

Russian Foreign Minister Sergei Lavrov hit back by charging that Washington was "smearing" Moscow and claimed the United States wanted to "seize" Ukraine for its own "geopolitical ambitions and not the interests of the Ukrainian people".

Ukraine's acting President Oleksandr Turchynov has vowed to push on with the "anti-terrorist" offensive to put down the rebellion in the east.

"We will not back down from the terrorist threat," Turchynov said in a televised address Thursday, telling Russia to stop interfering in Ukraine's internal affairs.

Russia, which supplies gas to Ukraine and to many EU countries, has said it can weather U.S. sanctions, but warned they would trigger a tit-for-tat cycle which no-one would win.

The United States and the European Union have already targeted Putin's inner circle with visa and asset freezes and imposed sanctions on a key Russian bank.

Further punishment, though, has raised fears among some EU states that diminished Russian gas supplies could undermine a fragile European economic recovery.