Russian leaders reacted angrily Thursday to President Barack Obama's decision to slap further sanctions on Russian banks, energy firms and defense companies over Russia's actions in Ukraine.

"Sanctions are evil," said Prime Minister Dmitry Medvedev, as he warned that the steps taken by Washington and the European Union would lead to worsening relations -- and possible Russian retaliation.

Russia's Foreign Ministry warned that it would not "tolerate blackmail" and reserved the right to take countermeasures, according to the state-run RIA Novosti news agency.

Deputy Prime Minister Dmitry Rogozin was similarly defiant, tweeting: "The sanctions imposed by Washington on Russian defense sector majors are unlawful and demonstrate that the U.S. is engaged in unfair competition on the arms market.

"Anyway, the Americans cannot put a lid on the ongoing re-arming of the Russian armed forces or shatter the export potential of our defense sector."

As deadly violence continues to roil eastern Ukraine, European Union leaders also said they intended to increase sanctions, signaling growing Western concern about Russia's continued support for the separatists battling the Ukrainian military.

Ukrainian jet 'shot down'

Tensions between Ukraine and its larger neighbor showed no sign of easing Thursday, as Ukrainian officials reportedly accused a Russian fighter of shooting down a Ukrainian jet the previous evening while it was flying in Ukrainian airspace.

"A military plane of the Russian Armed Forces launched a missile strike against an Su-25 aircraft of the Ukrainian Armed Forces, which performed tasks on Ukrainian territory," Ukraine's National Security and Defense Council spokesman Andriy Lysenko was quoted as saying by the official Ukrinform news agency.

"Our plane was shot down," he said, adding that the pilot ejected and was picked up safely by Ukrainian forces.

In response to the expanded sanctions, Ukrainian Prime Minister Arseniy Yatsenyuk in Kiev had tough words for Russia.

"It is time to pay for violating the international law, military aggression, constant supply of weapons from Russia to the territory of Ukraine, financing militants who kill civilians and try to destroy Ukraine," he said.

"Russia will pay for the war it started against Ukraine."

The Pentagon said Wednesday that Russia now had 12,000 troops on the border with Ukraine, as well as some heavy weapons. The troop numbers had fallen to about 1,000 previously from a high of an estimated 40,000 forces earlier this year.

Ukraine's government has accused Russia of allowing weapons and military equipment, including tanks, to cross the border illegally into the hands of pro-Russian separatists.

Western officials have leveled the same charges at Moscow and urged it to act to ease the situation or face economic consequences and increased diplomatic isolation.

Medvedev: We'll take measures in response

However, Moscow insists that the West's sanctions will only worsen the situation.

"They never bring success to those who implement them," Medvedev said of sanctions, as he addressed the government in remarks broadcast on Russia 24.

"So-called sectoral sanctions implemented by the United States unfortunately will lead to a growth of anti-American and anti-EU mood in Russia. We will come back to the 1980s. It's sad. If that's our partner's goal, then they achieved it."

Medvedev said Russia would have to look at its financing for defense and security measures in light of the pressure being put on it.

"If our partners carry on sanctions, we'll take measures against foreign companies and people in response," he warned. "These sanctions won't help Ukraine."

His words echoed a warning by Russian President Vladimir Putin on Wednesday that the sanctions are already harming ties between his nation and the United States.

"They generally have a boomerang effect and, without a doubt, in this case, are driving the Russian-U.S. relations into a stalemate and seriously damaging them," he said, according to a Kremlin transcript of his remarks to reporters on a visit to Brazil.

"I am certain that this is harmful to the U.S. Administration and American people's long-term strategic national interests."