The action by the US State Department is the latest salvo in a series of disputes between the rival powers and comes less than a month after US President Donald Trump met his Russian counterpart Vladimir Putin in Helsinki.

The State Department said Wednesday the new sanctions were in response to "the use of a 'Novichok' nerve agent in an attempt to assassinate UK citizen Sergei Skripal" -- who was a Russian double agent -- and his daughter Yulia on English soil in March.

They were aimed at punishing Putin's government for having "used chemical or biological weapons in violation of international law," spokeswoman Heather Nauert said in a statement.

But the punitive measures triggered a furious reaction from Moscow.

Russia will "work on developing retaliatory measures," foreign ministry spokeswoman Maria Zakharova told journalists.

"Whatever the sanctions against Russia are, the retaliatory measures will be the same," she said.

"If they dream up some (measures), we will answer -- it's not our choice."

Kremlin spokesman Dmitry Peskov was equally emphatic.

"We consider categorically unacceptable the linking of new restrictions, which we as before consider illegal, to the case in Salisbury," he told journalists.

He said Moscow felt it could now "expect anything at all from Washington" but nevertheless retained "hopes of building constructive relations."

The announcement of sanctions caused Russian stock markets to drop dramatically on opening and the ruble reached its lowest point since November 2016. The markets and the currency rebounded slightly over the day while remaining sharply down.

Finance minister Anton Siluanov assured Russians that the government and the central bank have "all the necessary tools to ensure financial stability," saying the economy has become more resistant to external shocks in recent years.

Vladimir Vasilyev, a senior researcher at the Institute of the US and Canada in Moscow, said the Americans were strengthening sanctions "from an element of pressure into an ultimatum."

He said the countries were now in a state "balancing on the verge of war."

- Threat of wider sanctions -

The move could cut off hundreds of millions of dollars worth of exports to Russia, said a senior State Department official on condition of anonymity.

The official told reporters the administration decided to impose a "presumption of denial" for the sale to Russia of "national security sensitive" US technologies that require federal government approval.

Such technologies have often been used in items including electronic devices as well as calibration equipment. The exports were previously allowed on a case-by-case basis.

In the event of non-compliance, the official added, a second round of "draconian" sanctions would be given a green light. These could go as far as a ban on Russian airlines using US airports.

The latest US action follows the treasury's imposition of sanctions in March against 19 Russian citizens and five entities for interfering in the 2016 US election -- the toughest steps against Moscow since Trump took office.

Also in March, Washington ordered the expulsion of 60 Russian diplomats, and the closure of Russia's consulate general in Seattle.

Moscow ordered 60 American diplomats expelled in a tit-for-tat response.

- 'Provocative, reckless behaviour' -

Britain said it welcomed the US response to the chemical attack in Salisbury, the English town where the Skripals were poisoned.

A spokesman for Prime Minister Theresa May said the sanctions would send "an unequivocal message to Russia that its provocative, reckless behaviour will not go unchallenged."

This week, Britain's Guardian newspaper reported that London was preparing to ask Moscow to extradite two Russian citizens suspected of carrying out the Salisbury attack.

The Skripals survived but one of two people poisoned by the same Novichok agent in a nearby town, 44-year-old Dawn Sturgess, subsequently died.

Moscow has angrily rejected any involvement in the poisoning, plunging diplomatic relations with London into crisis.

The Russian economy is still reeling from international sanctions imposed on Moscow in 2014 over its actions in Ukraine and a crash in oil prices the same year.

While Russia returned to growth in 2017 after two years of recession, it pales in comparison with growth figures seen during Putin's first two terms in office from 2000 to 2008 thanks to soaring oil prices.

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