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Boris Johnson has said there are "mixed signals" from Russia, after it said it was pulling back some of its troops from near Ukraine.
The PM said talks between Russia and Western powers has shown "signs of a diplomatic opening" to avert conflict.
But he added latest intelligence on Russian military activity was "not encouraging".
Russia denies it is planning an attack, despite having more than 100,000 troops at Ukraine's border.
The build-up has brought increasingly grave warnings in recent days, with the UK joining the US is saying an invasion could come at any time.
Speaking to reporters after an emergency meeting of UK ministers to discuss the situation, Mr Johnson said Russia had shown an "openness to conversations" about resolving the crisis diplomatically.
But he added that intelligence on Tuesday showed Russian forces were "being brought closer to the border" with Ukraine.
Intelligence suggests Russia is also constructing field hospitals near the border, he added, in what could only be interpreted as "as preparation for an invasion".
He said the West wanted to see a "programme of de-escalation" from Russia, and had a "very tough" set of sanctions "ready to go" in the event an invasion takes place.