We study numerically and experimentally magnetic metamaterials based on cut-wire pairs instead of split-ring resonators. The cut-wire pair planar structure is extended in order to create a truly two-dimensional metamaterial suitable for scaling to optical frequencies. We fabricate the cut-wire metamaterial operating at microwave frequencies with lattice spacing around 10% of the free-space wavelength, and find good agreement with direct numerical simulations. Unlike the structures based on split-ring resonators, the nearest-neighbor coupling in cut-wire pairs can result in a magnetic stop-band with propagation in the transverse direction.