Ukraine has launched a military assault on the flashpoint town of Slavyansk, raising the stakes in the showdown with Russia, which has promised "catastrophic consequences" if Kiev stepped up operations.
Insurgents shot down two army helicopters, killing two servicemen, including a pilot, as the army tightened its noose around the rebel-held town of 160,000 people.
The predawn offensive drew a sharp response from Moscow, where a spokesman for President Vladimir Putin said it dealt a "final blow" to a deal clinched last month in Geneva meant to ease the crisis.
A spokeswoman for insurgents in Slavyansk, the epicentre of tensions in eastern Ukraine, said the army had staged a "full-scale attack" on the town.
An AFP reporter on the scene saw a column of eight armoured vehicles breaching a rebel-held checkpoint just south of Slavyansk and heard explosions and sporadic small arms fire as helicopters circled overhead.
The raid marked a dramatic escalation in the crisis and jeopardised negotiations to release seven European OSCE inspectors being held by Slavyank's insurgents.
The Kremlin said it had an envoy in east Ukraine negotiating for their freedom.