Pro-Russian rebels shot down two Ukrainian helicopters on Friday, killing two crew members, while Moscow accused Kiev of wrecking hopes of peace by launching a "criminal" assault to retake the separatist-held town of Slovyansk.
In the southern port of Odessa, one man was shot dead in clashes between supporters of Ukrainian unity and pro-Russian activists, police said. Protesters threw petrol bombs, paving stones and explosive devices during the disturbances.
Though Ukrainian forces embarked on one of their most concerted military operations yet witnessed to regain control in the country's embattled east, their advance on the ground was limited. Nevertheless, President Vladimir Putin's spokesman Dmitry Peskov accused Kiev of firing on civilians from the air in a "punitive operation" that destroyed an international peace plan.
Russia was "extremely worried" about the fate of Russians in the eastern Ukrainian town, including an envoy sent to help free German and other foreign hostages, Peskov said.
The dramatic language seemed to raise the stakes, as Moscow has tens of thousands of troops massed on the border and claims the right to invade if needed to protect Russian speakers.
Ukraine's president, Oleksander Turchynov, said Russian "armed saboteurs" had tried to cross into the country overnight, but were pushed back by Ukrainian border troops. He gave no further details.
His Western-backed government rejected Russia's interpretation of events, saying Moscow was supporting groups in eastern Ukraine who were "putting civilians in danger, seizing hostages and creating an atmosphere of terror and violence."
Journalists in Slovyansk, the most heavily fortified bastion of pro-Russian separatists in eastern Ukraine, heard shooting break out and saw one helicopter opening fire before dawn. Ten hours later, the city was largely quiet, with shops shut and armed separatists in control of the streets.
Advancing Ukrainian forces in armored vehicles took up positions closer in to the suburbs, but rebels still controlled most of the town of 130,000.
Turchynov said the operation had been complicated by the rebels' use of human shields and had not progressed as quickly as had been hoped.
The Ukrainian Defence Ministry said two Mi-24 attack helicopters had been shot down during the night by insurgents armed with shoulder-launched anti-aircraft missiles . Two airmen were killed and others wounded.
Kiev said the firing of missiles that brought down its helicopters was evidence that Russian forces were present in the town. Moscow denies that its troops are on the ground.
Instead, Putin's spokesman heaped blame on the Ukrainian government, which took power two months ago after pro-Western protests forced the Kremlin-backed elected president to flee to Russia.
"While Russia is making efforts to de-escalate and settle the conflict, the Kiev regime has turned to firing on civilian towns with military aircraft and has begun a punitive operation, effectively destroying the last hope of survival for the Geneva accord," Peskov said, referring to a deal on April 17 signed by Russia, Ukraine, the U.S. and the European Union.
The EU said it was watching events in eastern Ukraine with growing concern. But Kiev is not a member of NATO and Western leaders have made clear they will not fight to defend Ukraine.