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Russian stocks plunged and the ruble slid closer to a record low on Tuesday as investors reacted to President Vladimir Putin's decision to order troops into eastern Ukraine, CNN reported.

Moscow's MOEX stock index dropped 1.5 per cent after shedding more than 10 per cent on Monday, bringing losses so far this year to about 20 per cent.

Shares in Russian oil company Rosneft were hardest hit on Tuesday, dropping 7.5 per cent. In total, more than $30 billion has been wiped off the value of Russian stocks this week alone, the report said.

The ruble fell towards 81 versus the US dollar on Tuesday, its weakest level in more than a year, and close to its record low.

The moves prompted Russia's central bank to announce measures to support banks, including a provision that will allow them to use last Friday's prices for stocks and bonds when reporting their financial positions.

More pain could be on the way.

"We expect further declines near-term in the Russian stock market," analysts at JPMorgan Chase wrote in a note to clients on Tuesday.

The Wall Street bank downgraded Russian equities to "neutral" from "overweight", CNN reported.

Damage to Russia's markets and economy would be limited if its troops do not advance beyond the parts of eastern Ukraine that Vladimir Putin recognised as independent on Monday, according to analysts.

But Russia would pay a higher price if further aggression causes the West to respond with punishing sanctions that could cut the country's banks off from the global financial system and make it difficult to export oil and natural gas, the report said.

Analysts at Capital Economics said on Tuesday that the most commonly-discussed sanctions could knock 1 per cent off Russia's gross domestic product, but more aggressive measures such as blocking Russia from the SWIFT global payments system could reduce economic output by 5 per cent, CNN reported.