BRUSSELS, May 12 - The European Union is set to step up pressure on Russia on Monday by taking a first cautious step towards extending sanctions to companies, as well as people, linked to Moscow's annexation of Ukraine's Crimea region, Reuters reported.

Discussions among EU foreign ministers in Brussels will again be dominated by the Ukraine crisis after pro-Moscow rebels held a referendum on self-rule in parts of eastern Ukraine on Sunday and fighting flared up again.

The EU declared the referendum illegal and said it would not recognize its outcome, but separatist leaders in eastern Ukraine may use the vote to formalize a split with the capital Kiev that began with the armed takeover of state buildings in a dozen eastern towns last month.