President Vladimir Putin said on Tuesday that Russia would only use military force in Ukraine as a last resort, in remarks apparently intended to ease East-West tension over fears of war in the former Soviet republic.

Russia however reserved the right to use all options in Ukraine to protect its compatriots there who were living in "terror", Putin said. His comments lifted Russian bond markets after a panic sell-off on Monday.

While Putin said sanctions being considered against Russia would be counter-productive, a senior US official said Washington was ready to impose them in days rather than weeks.

US Secretary of State John Kerry arrived in Kiev and announced an economic package and technical assistance for Ukraine in a show of support for its new government.

Putin said there had been an unconstitutional coup in Ukraine and ousted leader Viktor Yanukovich, an ally of Russia, was still the legitimate leader of the country despite giving up all power.

Last month's ousting of Yanukovich after months of street protests in Kiev and Russia's bloodless seizure of Ukraine's Crimea region prompted a confrontation between Moscow and the West widely seen as the most serious since the end of the Cold War. The West has been alarmed at the possibility that Russia might also move into eastern and southern Ukraine, home to many Russian speakers.

"There can be only one assessment of what happened in Kiev, in Ukraine in general. This was an anti-constitutional coup and the armed seizure of power," said Putin, looking relaxed as he sat before a small group of reporters at his residence near Moscow.

"As for bringing in forces. For now there is no such need but such a possibility exists," he said. "What could serve as a reason to use military force? It would naturally be the last resort, absolutely the last."

Earlier on Tuesday, Putin ordered troops involved in a military exercise in western Russia, close to the border with Ukraine, back to their bases. He said armed men who had seized buildings and other facilities in Crimea were local groups.

Russian dollar bond markets rebounded on Tuesday, encouraged by Putin's comments.

Russia had paid a heavy financial price on Monday for its military intervention in Ukraine, with the Moscow stock market falling more than 10 percent, wiping nearly $60 billion off the value of Russian firms.

Kerry's visit to Kiev comes as Washington and its Western allies step up pressure on Moscow to withdraw its troops from Crimea or face economic sanctions and diplomatic isolation.

A senior US administration official, who briefed reporters en route to Kiev, said Washington would work with Congress to approve $1 billion in loan guarantees to help lessen the impact on Ukrainians of proposed energy subsidy cuts.

Nato allies will hold emergency talks on the crisis on Tuesday, for the second time in three days.

In further pressure on Kiev, Russia's top gas producer Gazprom said it would remove a discount on gas prices for Ukraine from April, Interfax news agency cited the company's chief as saying on Tuesday.  -Reuters