* Clinton says Assad has shown his true intentions
* Diplomat says sanctions on Assad more likely
* Clinton says U.S. estimates death toll at nearly 1,000 (Adds comments from White House, fresh quotes, background)
By Andrew Quinn and Arshad Mohammed
WASHINGTON, May 17 (Reuters) - The United States and the European Union said on Tuesday they plan to implement new steps against Syria soon if it does not abandon its brutal crackdown, and diplomats said both would impose sanctions on Syrian officials for rights abuses.
U.S. Secretary of State Hillary Clinton blamed Syrian President Bashar al-Assad for two months of violence against protesters seeking greater political freedoms.
The probability of imposing sanctions on Assad for human rights violations has gone up significantly, a Western diplomat said. Targeting Assad personally with sanctions, which the United States and the EU have so far avoided, would be a significant new break with Damascus and raise questions about whether the West ultimately seeks his removal from power.
"He's not moving in the right direction, so the probability that he is sanctioned is much higher," said the diplomat, who spoke on condition of anonymity.
European governments agreed on Tuesday to tighten sanctions against the Syrian leadership, but said they would decide next week about whether to include Assad on the list. [ID:nLDE74G1L5].
Clinton, in her most direct criticism of Assad to date, said his crackdown had killed nearly 1,000 people.
"President Assad talks about reform, but his heavy-handed brutal crackdown shows his true intentions," Clinton said in an appearance with EU foreign policy chief Catherine Ashton. "We will be taking additional steps in the days ahead."
Ashton said she had spoken last week to Syria's foreign minister to convey "how important it was to take this closing window of opportunity and change course."
"If the government really does ... want to see some kind of change, it's got to be now," Ashton said. "We need to consider all of the options, and I think there will be a number of moves in the coming hours and days that you will see."
White House spokesman Jay Carney also warned that the "window is narrowing" for Damascus to avoid further U.S. sanctions, but, like both Clinton and Ashton, he provided no details or timing for any actions.
Syrian rights activists say at least 700 civilians have been killed by security forces. Clinton said the best U.S. estimate was nearly 1,000 deaths.
MASS GRAVES ALLEGED
Villagers near Syria's southern city of Deraa said they had found two separate mass graves, containing up to 26 bodies. The government denied the existence of any mass graves, saying the reports were part of a "campaign of incitement" against authorities. [ID:nLDE74G1U7]
State Department spokesman Mark Toner said the United States was studying the reports.
"These are deeply disturbing reports, but they're on top of a steady drumbeat of human rights abuses over the past weeks and indeed months," he told a news briefing.
The Syrian government blames most of the violence on armed groups backed by Islamists and outside powers, saying they have killed more than 120 soldiers and police.
The increasing U.S. pressure comes despite what U.S. officials say is limited U.S. leverage on Syria and fears of scuttling two years of diplomatic work to woo Damascus away from its alliance with U.S. foe Iran.
The United States returned an ambassador to Damascus in January after a five-year break, and Toner said it was important to keep lines of communication open.
"We still believe it's important that we have a senior U.S. government official on the ground who can speak on behalf of the U.S. government, who can convey our concerns," he said.
U.S. President Barack Obama last month signed an executive order imposing new sanctions against Syria's intelligence agency and two relatives of Assad for alleged human rights abuses.
The EU, for its part, put 13 Syrian officials on its sanctions list in what it described as a move to gradually increase pressure.
Both U.S. and EU officials have said Assad himself could become a future target for sanctions if the violent response to protests against his 11-year rule continues.
"We've never closed the door on him as a possible target for additional measures," Toner said, saying Clinton had made clear that Assad is "responsible ultimately for his actions."
"We're looking at options and ways to apply pressure on Assad," Toner said. "The world is increasingly concerned about his behavior and the behavior of his regime ... we've said all along that we're going to hold those responsible accountable for their actions." (Additional reporting by Mark Hosenball; editing by David Lawder and Mohammad Zargham)
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