KIEV, March 13 - Russia launched new military exercises near its border with Ukraine on Thursday, showing no sign of backing down on plans to annex its neighbor’s Crimea region despite a stronger than expected drive for sanctions from the EU and United States, Reuters reported.

In an unusually robust and emotional speech, German Chancellor Angela Merkel warned of "catastrophe" unless Russia changes course, while a man was killed in Ukraine in fighting between rival protesters in a mainly Russian-speaking city.

At the U.N. Security Council, the United States circulated a draft resolution that would declare illegal Sunday's planned referendum on independence for Ukraine's Crimea region.

But Russia, one of the Security Council's five veto-wielding permanent members, made clear it opposed the draft.

"Russia announced they will kill it," a senior Western diplomat told Reuters.

In Berlin, Merkel removed any suspicion she might try to avoid a confrontation with Russian President Vladimir Putin.

"We would not only see it, also as neighbors of Russia, as a threat. And it would not only change the European Union's relationship with Russia," she told parliament. "No, this would also cause massive damage to Russia, economically and politically."

U.S. Secretary of State John Kerry said serious steps would be imposed on Monday by the United States and Europe if the referendum on Crimea joining Russia takes place on Sunday as planned.

Merkel, a fluent Russian speaker who grew up in communist East Germany, has emerged in recent days as a leading figure in threatening tough measures against Moscow.

Her foreign minister, Frank-Walter Steinmeier, said that over the weekend, European states would draw up a list of Russians who will face visa restrictions and asset freezes.

Putin declared Russia's right to invade its neighbor on March 1, as Russian troops were already seizing control of Crimea, a Black Sea peninsula with a narrow ethnic Russian majority and a Russian naval base.

Events have moved rapidly, perhaps signaling an effort by Moscow to turn the annexation into a fait accompli before the West can coordinate a response.

In the Ukrainian city of Donetsk, a young man was stabbed to death and more than a dozen people were in hospital after pro-Russian and pro-European demonstrators clashed. The violence was the worst since last month's overthrow of the Moscow-backed president, Viktor Yanukovych.

But in an apparently conciliatory move, Russia backed deployment of an OSCE monitoring mission in Ukraine, including Crimea, the Swiss chairman of the European rights watchdog said.

The prospect that EU measures could be implemented as soon as Monday has weighed down the Russian economy.

Goldman Sachs revised its prediction for Russian economic growth this year down to 1 percent from 3 percent, blaming the tension over Ukraine for capital flight that would cripple investment. It said $45 billion had already left Russia this year, mostly Russians stashing money abroad.

The Russian stock market hit a 4-1/2-year low on Thursday and is down 20 percent since mid-February. The cost of insuring Moscow's debt against default rose to its highest level in nearly two years.

The crisis has already forced several Russian firms to put plans on hold for public offerings to raise cash abroad.

Yet none of that appears to have slowed down Putin, who told officials of the Winter Paralympic Games he is hosting in Sochi that Russia was "not the initiator" of the crisis.

The Russian Defence Ministry said 8,500 troops were taking part in new military exercises near the Ukrainian border, testing artillery and rocket launchers.

It was the second big exercise Moscow has ordered since the crisis began; the first, involving 150,000 troops, started a few days before Russian forces seized Crimea.

In a gesture of support for NATO's eastern members, U.S. F-16 fighter jets landed at Poland's Lask air base on Thursday.

Among efforts by the West to isolate Russia politically, the Organization for Economic Cooperation and Development, a 34-member rich nations' club, announced it was suspending membership talks with Russia, under way since 2007. (rt/ez)