Slavyansk - Ukraine's new Western-backed leader sought urgent talks with Russian President Vladimir Putin on Wednesday after rebels shot down an army helicopter despite ceasefire orders from their own commander to observe a fragile truce.
The death of nine servicemen outside the pro-Russian stronghold city of Slavyansk and loss of two other soldiers in attacks by separatist gunmen prompted Ukrainian President Petro Poroshenko to threaten to unleash a powerful new military campaign in the industrial east.
An AFP team in Slavyansk heard a new wave of shelling being launched by Ukrainian forces who have effectively surrounded the devastated city of nearly 120 000 on Wednesday morning.
Their push was met with extended rounds of anti-aircraft and heavy machine gun fire that echoed through deserted city streets.
"This is the calm before the storm that begins once the ceasefire ends," said a 42-year-old rebel who is simply known to his unit as "Oleksandr the Soldier".
Poroshenko's threat of retaliation dealt a crushing blow to budding hopes of the sides mediating an end to 11 weeks of fighting that has killed more than 435 people and brought the ex-Soviet nation to the brink of collapse.
Worst crisis since 1991
Kiev's temporary ceasefire was picked up by separatist commanders on Monday but was due to expire on Friday morning after just one round of inconclusive and indirect talks.
Putin urged both sides to extend the truce and further asked parliament to revoke his 1 March authorisation to invade his western neighbour in a self-proclaimed bid to "protect" ethnic Russians from the nationalists now in power in Kiev.
The Kremlin said Putin was seeking to encourage dialogue that could help bridge the worst stand off in East-West relations since the Cold War.
But Kiev and Washington accuse Putin of covertly arming the rebels in retaliation for the February ouster of a pro-Russian administration that abruptly ditched an historic EU agreement and preferred closer ties with Moscow instead.
Poroshenko will sign the final chapters of that pact in Brussels on Friday despite Kremlin threats to follow up a cut in gas deliveries it imposed on 16 June with punishing trade restrictions.
The Ukrainian leader now hopes that German Chancellor Angela Merkel and French President Francois Hollande will join him on a conference call to Putin that could decide the immediate faith of diplomatic efforts to resolve Ukraine's worst crisis since its independence in 1991.Nato confronts Ukraine
The crumbling hopes for a quick solution will also confront Nato foreign ministers when they huddle in Brussels amid pleas from ex-Soviet satellite nations for the Alliance to beef up its military presence along Russia's western frontier.
The meeting will also see US Secretary of State John Kerry conduct his first bilateral talks with Ukrainian Foreign Minister Pavlo Klimkin - a veteran diplomat who had represented Poroshenko in closed door negotiations with Russia that resulted in Kiev's decision to call a temporary truce.
The current negotiations are being led by an unusual assortment of figures who include former Ukrainian leader Leonid Kuchma and Viktor Medvedchuk - the one-time chief of staff of ousted President Viktor Yanukovych who is currently on a US sanctions list.
Medvedchuk's presence at the first and only round of negotiations between the rebels and Kiev on Monday evening created huge controversy in Ukraine.
He unofficially represents the separatist cause but is seen to be so close to Putin that his daughter is rumoured to have the Russian strongman as a godfather.
Some analysts believe Putin trusts Medvedchuk enough to believe he will lead negotiations that result in the Kremlin preserving its influence over eastern Ukraine.
But the Kremlin chief would also like to be seen as a proponent of dialogue to avoid painful economic sanctions that both Washington and the European Union have threatened to unleash unless Putin took immediate steps to promote peace.
The White House said it was encouraged both by Putin's latest steps and the rebels' acceptance of Poroshenko's temporary ceasefire.
"That said, in the coming days ... it is actions, not just words, that will be critical," White House spokesperson Josh Earnest added.
But the Mi-8 helicopter's downing on Tuesday underscores the limited control both Russia and senior rebel leaders have over some militia units that are apparently operating according to their own rules on the battlefield.