Yugoslav foreign minister, Zivadin Jovanovic

Mr Jovanovic was speaking in Istanbul during a meeting of foreign ministers from seven Balkan states which was supposed to focus primarily on economic co-operation.

A statement from the chairman of the meeting, Turkish Foreign Minister, Ismail Cem, emphasised that all the other ministers gathered there had condemned the escalation of violence in Kosovo.

The EU imposed new economic sanctions on Yugoslavia on Monday in protest at indiscriminate Serbian artillery attacks on ethnic Albanian villages in the province of Kosovo.

Serb Information Centre's, Misha Gavrilovic speaking to BBC Radio 5

Mr Jovanovic described such measures as unnecessary and unprovoked, and the spokesman for the Serbian Information Centre in London, Misha Gavrilovich, described the EU decision as an "act against a legitimate government".

Any Nato intervention in the Kosovo crisis would constitute "a step of straightforward, multi-national aggression against a state," Mr Gavrilovich said.

EU and US ban investment

The BBC's Ben Brown reports from the Kosovo front line

Washington also decided to ban investment in Serbia and announced it was freezing Yugoslav assets in the US.

US State Department spokesman James Rubin said: "We are now moving forward to implement the assets ban and the investment ban."

European foreign ministers have also discussed possible military options. Nato has contingency planning for the possible deployment of a significant number of troops in neighbouring Albania should the crisis worsen.

However, they failed to take a final decision on implementing a freeze on Yugoslav assets in EU countries.

Robin Cook: "President Milosevic has ratcheted up the violence in Kosovo" (11")

The British Foreign Secretary Robin Cook, who chaired the meeting, said the decision sent "a very united signal of concern" to the Yugoslav President Slobodan Milosevic.

The BBC correspondent in Luxembourg says leaders around Europe are warning that Kosovo threatens to escalate into another Bosnia.

Programme for action

Top-level meetings are planned throughout this week aimed at resolving the crisis.

Ethnic Albanians demand from EU ministers to describe events in Kosovo as genocide

Normal rules would mean that international intervention would be restricted to caring for the refugees escaping the violence across the mountains, and to stopping Serb forces from following them across the border.

But a major international effort is underway to find some means of intervening more directly in the conflict.

• Thursday: Nato defence ministers gather in Brussels to review preparations for military intervention
• Friday: Foreign ministers from the G8 - the major powers including the Contact Group - convene in London.