US president Joe Biden is set to announce a fresh package of sanctions against Russia including long-feared measures targeting the country’s government debt, in a sharp escalation of Washington’s measures against Moscow.

News of the measures, which are due to be announced on Thursday, sparked a sell-off in Russian assets and a warning from the Kremlin that they could scupper efforts to reduce tensions between the two countries.

Two officials briefed on the plans told the Financial Times that the first anti-Russian measures from the Biden administration will include restrictions on several individuals and organisations, and the expulsion of 10 Russian diplomats from the US. They will also prevent American financial institutions from trading in newly issued state debt, known as OFZs, as well as debt from the National Wealth Fund and central bank.