(Adds Russian diplomatic proposal, Merkel spokesman)
* EU meets to decide on sanctions to defend Ukraine
* Russia wants "support group" to make Ukraine neutral
* Putin says Kiev failing to protect Russian speakers
* Ukraine military mobilising, fearing invasion in east
By Aleksandar Vasovic and Adrian Croft
SIMFEROPOL/BRUSSELS, March 17 (Reuters) - Crimea formally applied to join Russia on Monday after its leaders declared a Soviet-style 97-percent result in favour of seceding from Ukraine in a referendum condemned as illegal by Kiev and the West that will trigger immediate sanctions.
European Union foreign ministers met in Brussels to decide on visa bans and asset freezes against Russian and Crimean officials held responsible for Moscow's military seizure of the southern Ukrainian region that is home to its Black Sea fleet.
Crimea's parliament "made a proposal to the Russian Federation to admit the Republic of Crimea as a new subject with the status of a republic," a statement on its website said.
The move, dismembering Ukraine against its will, would escalate the most serious East-West crisis since the Cold War.
As state media in Russia carried a startling reminder of its power to turn the United States to "radioactive ash", President Barack Obama spoke to Vladimir Putin, telling the Russian president that he and his European allies were ready to impose "additional costs" on Moscow for violating Ukraine's territory.
The Kremlin and the White House issued statements saying Obama and Putin saw diplomatic options to resolve the dispute.
But Obama said Russian forces must first end "incursions" into its ex-Soviet neighbour while Putin renewed his accusation that the new leadership in Kiev, brought to power by an uprising that toppled his elected Ukrainian ally last month, were failing to protect Russian-speakers from violent Ukrainian nationalists.
Moscow responded to Western pressure for an international "contact group" to mediate in the crisis by proposing a "support group" of states that would push for recognition of the Crimean referendum and urge a new constitution for rump Ukraine that would require it to uphold political and military neutrality.
A complete preliminary count of Sunday's vote showed that 96.77 percent of voters opted to join Russia, the chairman of the regional government commission overseeing the referendum, Mikhail Malyshev, announced on television.
Officials said the turnout was 83 percent. Crimea is home to 2 million people. Members of the ethnic Ukrainian and Muslim Tatar minorities had said they would boycott the poll, held just three weeks after Russian forces took control of the peninsula.
Putin, whose popularity at home has been boosted by his action on Crimea despite risks for a stagnant economy, is to address a joint session of the Russian parliament about Crimea on Tuesday, his representative to the lower house said.
Russian stock markets were up 3.7 percent at 1120 GMT and the rouble recouped early losses as traders calculated that Western sanctions would be largely symbolic.
Moscow defended the takeover of the majority ethnic Russian Crimea by citing a right to protect "peaceful citizens". Ukraine's interim government has mobilised troops to defend against an invasion of its eastern mainland, where pro-Russian protesters have been involved in deadly clashes in recent days.
The Ukrainian parliament on Monday endorsed a presidential decree for a partial military mobilisation to call up 40,000 reservists to counter Russia' military actions.
Russia's lower house of parliament will pass legislation allowing Crimea to join Russia "in the very near future", news agency Interfax cited its deputy speaker as saying on Monday.
"Results of the referendum in Crimea clearly showed that residents of Crimea see their future only as part of Russia," Sergei Neverov was quoted as saying.
U.S. and European officials say military action is unlikely over Crimea, which Soviet rulers handed to Ukraine 60 years ago.
But the risk of a wider Russian incursion, as Putin calculates the West will not respond as he tries to restore Moscow's hold over its old Soviet empire, leaves NATO wondering how to help Kiev without triggering what some Ukrainians call "World War Three".
For now, the West's main tools appear to be escalating economic sanctions, which could seriously weaken the stagnant Russian economy, and diplomatic isolation.
Highlighting the stakes, journalist Dmitry Kiselyov, who is close to the Kremlin, stood before an image of a mushroom cloud on his weekly TV show to issue a stark warning. He said: "Russia is the only country in the world that is realistically capable of turning the United States into radioactive ash."
On Lenin Square in the centre of the Crimean capital Simferopol, a band struck up even before polls closed as the crowd waved Russian flags. Regional premier Sergei Aksyonov, a businessman nicknamed "Goblin" who took power when Russian forces moved in two weeks ago, thanked Moscow for its support.
The regional parliament rubber-stamped a plan to transfer allegiance to Russia on Monday before Aksyonov travels to Moscow, although the timing of any final annexation is in doubt.
"Cherish Putin, he is a great, great president!" said Olga Pelikova, 52, as fireworks lit up the night sky and fellow Crimeans said they hoped to share in Russia's oil-fuelled wealth after two decades of instability and corruption in Ukraine.
But many ethnic Tatars, Muslims who make up 12 percent of Crimea's population, boycotted the vote, fearful of a revival of the persecution they suffered for centuries under Moscow's rule.
"This is my land. This is the land of my ancestors. Who asked me if I want it or not?" said Shevkaye Assanova, a Tatar in her 40s. "I don't recognise this at all."
A pressing concern for the governments in Kiev and Moscow is the transfer of control of Ukrainian military bases. Many are surrounded by and under control of Russian forces, even though Moscow denies it has troops in the territory beyond facilities it leases for its important Black Sea Fleet.
Crimea's parliamentary speaker said on Monday Ukrainian military units in the region would be disbanded although personnel would be allowed to remain on the Black Sea peninsula, Russian news agency Interfax reported.
In Brussels EU foreign ministers were debating the size of a first list of Russian and Crimean officials to be sanctioned individually for actions that "threaten the territorial integrity, sovereignty and independence of Ukraine".
Czech Foreign Minister Lubomir Zaoralek told reporters a master list of 120 to 130 names had been whittled down to about 20 people who would be hit initially, including "political individuals" but not business people.
EU leaders meeting on Thursday and Friday may add further names and take further measures if diplomacy has not achieved progress by then, diplomats said.
German Chancellor Angela Merkel's spokesman said Russia was "isolated to a large degree in its recognition of this so-called referendum" and urged Putin to refrain from any military activity on Ukrainian territory that was not agreed with Kiev.
The foreign ministers were also expected to cancel an EU-Russia summit scheduled for June.
The U.S. administration is also preparing to identify Russians to punish with visa bans and asset freezes that Obama authorised this month. It, too, is likely to act on Monday. (Additional reporting by Mike Collett-White and Andrew Osborn in Simferopol, Ron Popeski, Richard Balmforth and Natalia Zinets in Kiev, Lina Kushch in Donetsk, Roberta Rampton and Matt Spetalnick in Washington, Adrian Croft and Jan Strupczewski in Brussels and Lidia Kelly and Timothy Heritage in Moscow; Writing by Alastair Macdonald and Paul Taylor; Editing by Giles Elgood)
Our Standards: The Thomson Reuters Trust Principles.