West African states are imposing immediate sanctions on Mali, Ivory Coast's president has announced.
Alassane Ouattara, current head of regional body Ecowas, said it had closed borders to trade and frozen Mali's access to bank accounts.
The group had given the leaders of the country's military coup until Monday to step down.
Coup leader Capt Amadou Sanogo said he has "taken note" of the Ecowas sanctions.
In a statement, he said the military junta was open to "mediation to find solutions out of the crisis" but that its priority remained "recovering the country's territorial integrity faced with the crisis in the north", AFP news agency reports.
Tuareg rebels have made rapid advances in the north of the country over the last few days.
Correspondents say that Mali, a poor, landlocked country, would struggle to survive an economic blockade.
It is almost entirely dependent on its Ecowas neighbours for trade. Mali also shares its currency with seven other regional countries - and other members of the CFA franc zone have said they will cut transfers to Mali's banks.
President Ouattara said: "All diplomatic, economic, financial measures and others are applicable from today [Monday] and will not be lifted until the re-establishment of constitutional order."
He added that Ecowas' military force had been put on standby.
'Blow to democracy'
Mali's neighbours are keen for order to be restored in the country.
"The situation in Mali is extremely serious, it is a blow to democracy and an attack on the territorial integrity of this country," Mr Ouattara said.
The army said it had staged its coup because the campaign against the Tuareg rebels had been poorly run.
But the rebels took advantage of the political situation over the weekend by seizing the key towns of Timbuktu, Gao and Kidal.
The rebels are divided into two groups - one fighting for independence for the northern Tuareg homelands and another linked to the north-west African branch of al-Qaeda.
There are some reports that the Islamists have raised their black flag over the ancient city of Timbuktu, a World Heritage site home to hundreds of historic Muslim manuscripts.
The UN Security Council will hold an emergency meeting on the crisis in Mali on Tuesday, AFP quoted a US mission spokesman as saying.
France initially called for the meeting because it is increasingly concerned about gains made by the rebels since the junta overthrew Mali's government, the agency adds.
Capt Sanogo has said the army is not leaving power, but has promised to consult local political forces to set up a transition body "with the aim of organising peaceful, free, open and democratic elections in which we will not take part".
The coup and Tuareg rebellion have exacerbated a humanitarian crisis in Mali and some neighbouring countries, with aid agencies warning that 13 million people need food aid following a drought in the region.