MPs in Crimea have asked Moscow to allow the southern Ukrainian region to become part of the Russian Federation, report agencies.
The parliament said if its request was granted, Crimean citizens could give their view in a referendum on 16 March.
Ukraine's interim Prime Minister Arseniy Yatsenyuk said the move had no legal grounds.
Crimea, a region whose population is mostly ethnic Russian, has been at the centre of tensions following the fall of Ukraine's pro-Moscow president.
Pro-Russian and Russian forces have been in de facto control of the peninsula for several days.
The announcement from Crimea's parliament comes as EU leaders meet in Brussels to discuss how to respond to Russia's troop deployment on Ukrainian soil.
The crisis centering on the Crimean peninsula could push Ukraine over the brink into bankruptcy. However, analysts believe international markets and European gas imports will not see significant shake-ups for now.
The turmoil in Crimea appears to be influencing international markets less than initially feared, and stock markets stabilized after plunging on Monday. But Ukraine is facing national bankruptcy unless international investors step in.
Russia's RTS index slumped 12 per cent on March 4 - its lowest point in six years - amid fears that the crisis would escalate. On thae day the Dow Jones Industrial Average fell by one per cent, Europe's benchmark EuroStoxx 50 fell by 2.25 per cent and Germany's DAX slumped by 3.5 per cent.
For the time being, analysts don't feel the global economy is in danger. "The European Union imports one fifth of its gas from Russia," says Commerzbank chief economist Jörg Krämer. But if gas could no longer be piped through Ukraine, the economist told DW, "only about half that amount could be redirected to other pipelines."
A supply risk for the EU may emerge, but that's unlikely, Krämer says, adding that Russia has always painstakingly adhered to private enterprise contracts in the past because the country's economy depends on gas exports. On the other hand, he argues Europe's dependency on Russian gas prevents a military intervention in the conflict. "The West has threatened to exclude Russia from the G8 summit, but it won't take military action - it never has," Krämer says.
Germany imports about one third of its gas from Russia, but a shift to US gas could compensate for any shortages, the Commerzbank analyst says. German companies with branches in Ukraine are in a different situation. About 500 German firms are in Ukraine, including Adidas and the Metro group, says Rainer Lindner, executive director of the Committee on Eastern European Economic Relations (OA).
About 6,000 German firms are active in Russia, and Germany is Ukraine's second most important trade partner after Russia. "Of course, they're worried about the future," Lindner tells DW.
The current situation in Ukraine is dramatic. The country has grappled with an imbalance in foreign trade for decades: high prices for Russian gas imports and low prices on the global market for Ukrainian exports such as grain and steel.
