President Vladimir Putin's order to 150,000 troops to be ready for war games near Ukraine was the Kremlin's boldest gesture yet after days of sabre rattling since its ally Yanukovich was ousted at the weekend.
Moscow denied that the previously unannounced drill in its western military district was linked to events in its neighbour but it came amid a series of increasingly strident statements about the fate of Russian citizens and interests.
With the political turmoil hammering Ukraine's economy, the central bank said it would no longer intervene to shield the hryvnia currency, which tumbled 4 percent on Wednesday and is now down a fifth since January 1. Wednesday's abrupt abandonment of Ukraine's currency peg sent ripples to Russia where the rouble fell to five-year lows and bank shares fell.
In Kiev, leaders of the popular protests that toppled Yanukovich named former economy minister Arseny Yatseniuk as their choice to head a new interim government.
In a display of people power, the so-called 'Euromaidan' council made its announcement of Yatseniuk, and candidates for several other key ministries, after its members addressed crowds on Independence Square.
Oleksander Turchinov, now acting president, said the new government would have to take unpopular decisions to head off default and guarantee a normal life for Ukraine's people.
The Euromaidan council's proposals have to be approved by parliament, which meets on Thursday in an atmosphere heavy with memories of recent bloodshed, whose hundred or so victims are taking on the status of martyrs.
The council named career diplomat Andriy Deshchytsya as foreign minister. Oleksander Shlapak, a former economy minister and former deputy head of the central bank, was named as finance minister. Andriy Paruby, head of the "self-defence" force protecting the Kiev protest zone from police action during the three months of conflict, was named secretary of the powerful National Security and Defence Council.
"This is a government which is doomed to be able to work only for 3-4 months ... because they will have to take unpopular decisions," Turchinov said.
In Crimea, thousands of ethnic Russians, who form the majority in the region, demonstrated for independence. They scuffled with rival demonstrators supporting the new Kiev authorities. The Crimea is home to part of Russia's Black Sea Fleet, which Moscow said it was taking steps to secure.
One person died in the Crimea protest, apparently of a heart attack during a crush of the crowd, Interfax news agency reported. A Reuters correspondent on the scene reported surging crowds and scuffles but no major violence.
NATO defence ministers, meeting in Brussels, issued a statement supporting "Ukrainian sovereignty and independence, territorial integrity, democratic development, and the principle of inviolability of frontiers". Their statement made no direct mention of the Russian war games.
U.S. Secretary of State John Kerry said Russia should respect the territorial integrity of Ukraine and be "very careful" in its judgments toward its neighbour.
"What we need now to do is not get into an old, Cold War confrontation," he said on MSNBC television.
Russia has repeatedly expressed concern for the safety of Russian citizens in Ukraine, using language similar to statements that preceded its invasion of Georgia in 2008.
"In accordance with an order from the president of the Russian Federation, forces of the Western Military District were put on alert at 1400 (1000 GMT) today," Interfax news agency quoted Russian Defence Minister Sergei Shoigu as saying.
Shoigu also said Russia was also "carefully watching what is happening in Crimea" and taking "measures to guarantee the safety of facilities, infrastructure and arsenals of the Black Sea Fleet," in remarks reported by state news agency RIA.
Since Yanukovich's downfall on Friday, all eyes have been on Putin, who ordered the invasion of neighbouring Georgia in 2008 to protect two self-declared independent regions with many ethnic Russians and others holding Russian passports, and then recognised the regions as independent states.
Any military action in Ukraine, a country of 46 million people that has close ties with European powers and the United States, would be far more serious - the closest the West and Russia have come to outright confrontation since the Cold War.
Despite the alarm raised by the sabre-rattling, many analysts expect Putin will pull back before taking armed action.
The war games would cause tension in Ukraine and Europe but were probably for show, said Moscow-based military analyst Alexander Golts: "Any rational analysis says that Russia would get nothing out of military intervention - it would become an international outcast."
Ukraine's new authorities say they are worried about separatism in Crimea, the only part of Ukraine where the majority is ethnic Russian.
Demonstrators poured into the regional capital Simferopol, where the provincial parliament was debating the crisis.
Pro-Russian crowds, some cossacks in silk and lambswool hats, shouted "Crimea is Russian!".
Rival demonstrators backing the new authorities - mainly ethnic Tatars repressed under Soviet rule - rallied under a pale blue flag, shouting "Ukraine! Ukraine!"
If the new ministers are approved, that would pave the way for IMF talks to stave off financial meltdown now that Russia is expected to cut off a $15 billion lifeline it offered Yanukovich when he turned his back on ties with the EU in November.
Yanukovich fled Kiev on Friday night after days of violence in which scores of his countrymen were killed, including demonstrators shot dead by police snipers from rooftops.
His whereabouts are not known, although the government says it believes he is hiding in Crimea. It wants him tried at the International Criminal Court in the Hague.
The new authorities must salvage the economy of a country near bankruptcy and heavily dependent on Russian gas. Traders in Kiev said the central bank was absent from the hryvnia market, allowing the currency to fall below 10 to the dollar, a record.
Central bank governor Stepan Kubiv said the bank would not intervene to prop up the currency in coming days. Sergiy Kruglyk, the bank's international relations director, said Kiev had "transferred from a fixed, so-called managed exchange rate to the flexible exchange rate".
Acting prosecutor Oleh Makhnytsky announced he had ordered police and intelligence agencies to draw up a list of foreign accounts held by Yanukovich's aides and their connections to search for "not millions, but billions" in stolen assets.
Abandoning the currency peg will halt the rapid erosion of Ukraine's foreign reserves spent under Yanukovich to prop it up, but the further the hryvnia falls, the harder it will become for Kiev to repay its dollar debt. The cost of a contract to insure Ukraine's debt rose to levels that signal investors believe a default within five years is likelier than not.