Ukraine seeks ruinous sanctions on Russia amid European hesitancy

Ukraine wants sanctions that are economically destructive enough for Russia to end its war after accusing some countries of still prioritising money over punishment for civilian killings that the West condemns as war crimes.

The democratic world must reject Russian oil and completely block Russian banks from the international finance system, President Volodymyr Zelenskiy said in his daily video address early on Thursday. 

After grisly images of dead civilians in the streets of Bucha sparked international condemnation, Zelenskiy said Kremlin forces were trying to cover up evidence of atrocities.

"We have information that the Russian military has changed its tactics and is trying to remove people who have been killed from streets and basements ... this is just an attempt to hide the evidence and nothing more," Zelenskiy said, but did not provide evidence.

Moscow has denied targetting civilians and says images of bodies in Bucha were staged to justify more sanctions against Moscow and derail peace talks. 

Russia's six-week-long invasion has so far forced over 4 million to flee abroad, killed or injured thousands, left a quarter of the population homeless, turned cities into rubble and prompted a slew of Western restrictions on Russian elites and the economy.

Washington on Wednesday announced measures, including sanctions on President Vladimir Putin's two adult daughters and Russia's Sberbank, and a ban on Americans investing in Russia.

The United States also wants Russia expelled from the Group of 20 major economies forum and will boycott a number of meetings at the G20 in Indonesia if Russian officials show up. 

But the head of Ukraine's presidential office Andriy Yermak said late on Wednesday that its allies must go further.

"Sanctions against Russia must be ruinous enough for us to end this terrible war," he said.

"My goal is to impose an embargo on the supply to Russia of technology, equipment, minerals and ores (and) rare earth dual-use minerals and thus stop the production of weapons in Russia."

Zelenskiy was earlier critical of some in the West.

"The only thing that we are lacking is the principled approach of some leaders ... who still think that war and war crimes are not something as horrific as financial losses," he told Irish lawmakers. 

European Union diplomats failed to approve new sanctions on Wednesday, as technical issues needed to be addressed, including on whether a ban on coal would affect existing contracts, sources said.

EU member Hungary said it was prepared to meet a Russian request to pay roubles for its gas, breaking ranks with the rest of the bloc and highlighting the continent's reliance on imports that have held it back from a tougher response on the Kremlin.

State refiners in China, which has close ties to Moscow, are honouring existing Russian oil contracts but avoiding new ones despite steep discounts, heeding Beijing's call for caution as western sanctions mount against Russia, six people told Reuters.