A G7 statement gave no detail of the sanctions, but US officials said they could announce measures by Monday.
The West accuses Russia of leading a secession rebellion in Ukraine's east, months after it annexed Crimea. Moscow denies the allegations.
Meanwhile, negotiators are trying to secure the release of international observers seized by pro-Russia gunmen.
Forces in the city of Sloviansk are still holding the eight European military observers and several Ukrainian army personnel who they seized on Friday and accuse of espionage.
Pro-Russian armed men have seized a number of government buildings in eastern Ukraine
Ukraine says its soldiers have now erected checkpoints around the eastern city of Sloviansk
The observers were taking part in a mission linked to the Organisation for Security and Co-operation in Europe (OSCE).
Jets 'violated air space'
Rebel militia continue to occupy official buildings in a dozen eastern cities, defying the government in Kiev.
Russia has tens of thousands of troops deployed along its side of the border with Ukraine and has said it would act if its interests were threatened.
The US accused Russian jets of violating Ukraine's airspace on Friday in a further sign of escalation.
Pentagon spokesman Col Steven Warren said Russian aircraft had entered Ukrainian airspace several times in the past 24 hours.
Meanwhile, the G7 praised Ukraine for acting with restraint in dealing with the "armed bands" that had occupied government buildings.
But the group, which includes the US, UK, Germany, Japan, France, Canada and Italy, condemned Russia's "increasingly concerning rhetoric and ongoing threatening military manoeuvres".
"Given the urgency of securing the opportunity for a successful and peaceful democratic vote next month in Ukraine's presidential elections, we have committed to act urgently to intensify targeted sanctions and measures to increase the costs of Russia's actions," said the statement.
The US and EU already has assets freezes and travel bans in place target a number of Russian individuals and firms accused of playing a part in the annexation of Crimea.
Credit to BBC