Putin: force would be 'last resort' in Ukraine

President Vladimir Putin has delivered a robust defence of Russia's actions in Crimea.

Russia's President Vladimir Putin. Picture: AFP.

MOSCOW - President Vladimir Putin delivered a robust defence of Russia's actions in Crimea on Tuesday and said he would use force in Ukraine only as a last resort, easing market fears that East-West tension over the former Soviet republic could lead to war.

But tension remained high on the ground, with Russian forces firing warning shots in a confrontation with Ukrainian servicemen.

Russian navy ships were also reported to have blockaded the strait separating the Ukrainian Black Sea peninsula from Russia.

At his first news conference since the crisis began, Putin said Russia reserved the right to use all options to protect compatriots who were living in 'terror' in Ukraine, but force was not needed for now.

His comments lifted Russian bonds and stock markets around the world after a panic sell-off on Monday.

Putin denied the Russian armed forces were directly engaged in the bloodless seizure of Crimea, saying the uniformed troops without national insignia were "local self-defence forces".

He also warned Western sanctions under consideration against Russia would be counter-productive.

US Secretary of State John Kerry made his first visit to Kiev since the overthrow of Russian-backed President Victor Yanukovich, describing the experience as "moving, distressing and inspiring".

Kerry laid flowers in Independence Square at a memorial to pro-Western protesters killed by police last month, met the country's interim leaders and announced a $1 billion economic package and technical assistance for the new government.

Putin said there had been an unconstitutional coup in Ukraine, and Viktor Yanukovich, who fled to Russia last week, was still the legitimate leader.

Kerry dismissed the Russian leader's account of events, telling a news conference in Kiev: "Not a single piece of credible evidence supports these claims."

He accused Moscow of invading Crimea in an act of aggression against Ukraine but said the United States was not seeking a confrontation and would prefer to see the situation managed through international institutions.

Ukrainian Prime Minister Arseny Yatseniuk told reporters in Kiev that the Ukrainian and Russian governments had begun consultations on the crisis "at the level of ministers".

He gave no details.