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(Adds Kiev says Russia shoots down jet)
* New U.S. sanctions target Putin allies
* Russian shares and rouble fall
* Russia warns it will hit back
By Steve Holland and Elizabeth Piper
WASHINGTON/MOSCOW, July 17 (Reuters) - President BarackObama imposed sanctions on some of Russia's biggest firms forthe first time, striking at the heart of Vladimir Putin'spowerbase by targeting companies closest to him over Moscow'sfailure to curb violence in Ukraine.
In the latest escalation of the conflict on theUkrainian-Russian frontier, Kiev said a Russian jet had shotdown one of its warplanes, its strongest accusation yet ofdirect Russian military involvement in the war. A Ukrainianmilitary spokesman said the pilot of the SU-25 fighter ejectedto safety.
After months of measures that hit only individuals andsmaller firms, Washington imposed sanctions on Russia's largestoil producer Rosneft, its second largest gas producerNovatek and its third largest bank Gazprombank. The firms arerun by Putin allies who have become wealthy during his tenure.
Moscow denounced what it called primitive revenge for eventsin Ukraine and pledged to retaliate. Putin said the U.S.sanctions would hurt U.S. energy companies and bring relationsto "a dead end". His prime minister, Dmitry Medvedev, called thesanctions evil, said they would not "bring anyone to theirknees" and that Russia would pay attention to defence spending.
The sanctions in effect close the firms to medium- andlong-term dollar funding. Other targets include Vnesheconombank,VEB, which acts as payment agent for the government, and eightarms firms, including the producer of the Kalashnikov assaultrifle.
However, Washington stopped short of freezing the companies'assets, closing off the short-term funding they need forday-to-day operations or stopping U.S. firms doing business withthem. Several were quick to say it was business as usual.
Russia's rouble-traded stock market and the rouble itselffell on opening but did not collapse. After stabilising, Rosneft was down around 4.5 percent and Novatek 7.5percent. The MICEX index was off 2.6 percent.
There was no suggestion of disruption to production byRosneft, by output the world's biggest oil company listed on astock exchange, which singlehandedly produces 4 percent of theworld's oil, more than any OPEC country apart from Saudi Arabia.
An actual disruption to such a huge producer could in theory cause a global energy crisis, but there was no sign of one onThursday, with oil prices only fractionally higher.
EU SANCTIONS
The measures mean that Washington has moved far further topunish Russia than its EU allies, who collectively do 10 timesas much trade with Russia as the United States and depend onMoscow for natural gas. Nevertheless, the European Union alsosaid it was imposing new sanctions and would draw up a list oftargets by the end of the month. It will block new loans toRussia through two development banks.
Moscow said the EU had "succumbed to the blackmail of theU.S. administration" to follow Washington in imposing sanctions.Some Russian officials predicted Brussels would baulk at thecost of the U.S. measures.
But Ukraine's Prime Minister Arseny Yatseniuk said thesimultaneous action by Washington and Brussels showed thatWestern countries were united in their support for Ukraine.
"All attempts by Russia to split the European Union, and tostop the European Union and United States from agreeing, weredoomed to failure," he told his government in a cabinet meeting.
Russia must stop supplying weapons to Ukraine's rebels, andany attempt to take Ukraine would fail, he said.
The sanctions show a new willingness to act by Westerncountries over a crisis that has escalated in recent weeks.Hundreds of people have died in fighting between Ukrainiantroops and heavily armed pro-Russian separatists who havedeclared independent "People's Republics" in two provinces.
Moscow denies supporting the rebellion, but many of theseparatist fighters and their main leaders are from Russia. Kievsays they have been bringing heavy weapons across the border.
The downing of the SU-25 fighter, which Kiev said onThursday had taken place on Wednesday evening, was the firsttime Ukraine has unconditionally accused Moscow of using its airpower in the war. On Monday a Ukrainian transport plane was shotdown by what Kiev said was a missile fired from Russia, but itcould not say if it was fired from the air or the ground.
Putin, who annexed Ukraine's Crimea peninsula in March andhas referred to southern and eastern Ukraine as "new Russia",had appeared keen in recent weeks to tamp down the worstconfrontation with the West since the Cold War, pulling backtens of thousands of troops from the frontier.
But in recent days, Washington and Brussels say, he hasagain sent some 12,000 troops to the frontier, while keeping theborder open to allow rebel fighters and arms to cross.
Ukraine drove rebels out of their main bastion in the townof Slaviansk this month, but hundreds of them have decamped toDonetsk, a city of nearly a million people, which has beenemptying as thousands of residents flee an expected battle.
EUROPE ON BOARD?
Obama warned of more sanctions if Russia did not takeconcrete steps to ease the conflict and said Putin had so farfailed to take steps needed to resolve the crisis peacefully.
"We have emphasized our preference to resolve this issuediplomatically, but that we have to see concrete actions and notjust words that Russia, in fact, is committed to trying to endthis conflict along the Russia- Ukraine border," he said.
The limits on the sanctions show how difficult it can be forWestern countries to punish Moscow without causing globaleconomic havoc. Russia is the world's largest oil producer and,after the United States, second largest producer of natural gas.
The latest measures appear designed to restrict the firms'access to investment capital while avoiding any disruption toenergy output. Notably, Russia's biggest company, gas exportmonopoly Gazprom which supplies around a third ofEurope's gas, was not included on the sanctions list.
Still, sanctions can have a strong indirect effect onRussia's economy by forcing companies to reconsider investmentsthere because of future risk. Previous rounds of U.S. and EUsanctions that targeted only a few dozen individuals and firmshelped encourage billions of dollars in capital flight that hurtRussia's shaky economy.
Rosneft, which under Putin absorbed the assets of a raft ofoil companies that were privatised in the 1990s, is the onlyRussian firm that rivals Gazprom in scale. It had sales of $40billion in the first quarter, about 8.6 percent of Russia's GDP.
Its boss Igor Sechin, Putin's close friend since the 1990s,has moved aggressively to win the company a bigger globalprofile. It supplies virtually every major international oilcompany and has joint projects with many of them.
In particular, it accounts for around a quarter ofproduction for BP, which owns 20 percent of it. It isalso in the midst of a deal to buy the oil trading assets ofU.S. investment bank Morgan Stanley and has several bigoil projects in Russia with Exxon Mobil.
Sechin, travelling with Putin in Brazil, said the sanctionswere "unjustified, subjective and unlawful, because the companyhas no role in the Ukraine crisis".
Novatek was not available for comment. VEB declined tocomment. Gazprombank said the stability of its operations andfinances were not affected. BP said the sanctions appear onfirst glance to focus on restricting access of targeted firms tomedium and long-term U.S. financing.
(For more details on the sanctions, see http://1.usa.gov/1kx0sxT) (Additional reporting by Richard Balmforth and Natalia Zinetsin Kiev, Jeff Mason, Patricia Zengerle and Phil Stewart inWashington, Adrian Croft in Brussels and Josephine Mason, EdwardMcAllister, and Jonathan Leff in New York; and by KatyaGolubkova and Polina Devitt in Moscow; writing by Peter Graff;editing by Philippa Fletcher)
