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* EU to finalise sanctions on Tuesday
* Germany says Moscow needs "strong signal"
* Moscow says will not respond with tit-for-tat measures (Recasts with comments from German government spokeswoman)
By Alexei Anishchuk and Michelle Martin
MOSCOW/BERLIN, July 28 (Reuters) - As fighting intensifiedin Ukraine on Monday, a diplomatic battle also raged, withBerlin warning that new European sanctions would send a "strongsignal" to Moscow, and Russia saying the measures could onlyboost its economic independence.
Foreign Minister Sergei Lavrov said Moscow had no intentionof imposing tit-for-tat sanctions, the day before the 28-nationEuropean Union was set to finalise a package of measures thatmay close the bloc's capital markets to Russian state banks.
"I assure you, we will overcome any difficulties that mayarise in certain areas of the economy, and maybe we will becomemore independent and more confident in our own strength," Lavrovsaid.
"We can't ignore it. But to fall into hysterics and respondto a blow with a blow is not worthy of a major country," he tolda news conference, adding that the sanctions against Russiawould be unlikely to achieve their goal.
The sanctions, and any retaliatory measures, could affect BP, whose 19.75 percent holding in Russian oil producerRosneft leaves it exposed to the Russian economy.
Kremlin-controlled Rosneft also has agreements withExxonMobil, Eni and Statoil to tapRussia's Arctic offshore oil and gas.
Lavrov said he hoped for an objective investigation into thecrash of the Malaysia Airlines flight that was downed overterritory held by Russian-backed separatists in eastern Ukraine,killing all 298 people on board.
The West says flight MH17 was almost certainly shot down bypro-Russian separatists using a Russian-supplied surface-to-airmissile. Russia has denied supplying such a missile.
Germany, Europe's biggest exporter to Russia, had beenreluctant to agree to heavier sanctions, but spokeswomanChristiane Wirtz said MH17 case had changed that.
"After the crash of the passenger plane MH17, a completelynew situation came about which makes further measuresnecessary," Wirtz said at a government news conference.
"Only such a substantial package would enable the Germangovernment and the EU to send a clear, strong signal to Russia."
PRESUMPTION OF INNOCENCE
EU states are expected to reach a final decision on Tuesdayon measures that also may include, in addition to capitalmarkets restrictions, an embargo on arms sales and limits ondual-use and energy technologies.
The EU added new names on Friday to its list of individualsand companies facing travel bans and asset freezes.
Russia warned sanctions could hamper cooperation oversecurity issues. Russian state development bank Vnesheconombank(VEB) has said it is counting on state support after U.S.sanctions closed long-term funding on it and other companies.
The West accuses Russia of allowing fighters and arms totravel freely over its border into rebel-held territory inUkraine's predominantly Russian-speaking east.
Lavrov said Moscow had tried to contribute to efforts to endthe fighting but the West has not sufficiently used its leverageover Ukrainian President Petro Poroshenko.
He repeated calls for an objective investigation into theshooting down of the Boeing 777, which Moscow has suggested wascaused by Ukrainian government forces.
"Only the honest, open participation of all those who haveaccess to information about the crash can be regarded as normal.Anything else we will consider as deceitful attempts toinfluence the investigation, putting presumption of innocence indoubt," he said.
He suggested that Kiev had hampered access to the crash siteon Sunday when international monitors abandoned plans to visitdue to reports of heavy fighting.
International monitors said the fighting itself could affectthe crash site, underlining the growing complexity of trying toestablish who shot down the plane.
Lavrov also said Moscow was hopeful that monitors from theOrganization for Security and Cooperation in Europe could bedeployed along Russia's border with Ukraine.
"We hope that this will dispel suspicions that are regularlybeing voiced against us, that those (border) checkpointscontrolled by the militias from the Ukrainian side are used formassive troops and weaponry deployment from Russia to Ukraine,"he said. (Writing by Thomas Grove; Editing by Robin Pomeroy)
