Protesters in east Ukraine deny having explosives, holding hostages

Protesters occupying the state security building in Luhansk, eastern Ukraine, on Tuesday denied a charge that they had wired the building with explosives and were holding people against their will.
   
"There are no explosives, no hostages. We do not need hostages to get what we want," said Anton, one of the protesters who described himself as a coordinator of the action.
   
Ukraine's state security service said earlier that pro-Russian separatists have placed explosives in a building they seized in the eastern city of Luhansk and are using weapons to hold around 60 people against their will.
   
Pro-Russian separatists occupied the SBU building on Sunday evening in one of a series of attacks in the east of the country.
   
"The anti-terror group of the security services of Ukraine (SBU) .. has established that the criminals have mined the building ... and are holding around 60 people, threatening them with weapons and explosives," the SBU said in a statement.

Also on Tuesday, Russia said a decision by NATO to limit Russian diplomats' access to its headquarters showed the military alliance could not rise above "the thinking of the Cold War era" and preferred the language of sanctions to dialogue.          

NATO announced tighter rules for access by Russian diplomats to its headquarters in Brussels on Monday, saying they were a consequence of its decision to suspend cooperation with Moscow over the annexation of Ukraine's Crimea region.

This comes after Russian Foreign Minister Sergei Lavrov dismissed U.S. accusations that Moscow was destabilizing Ukraine and said the situation could improve only if the interests of Russian speakers are taken into account.
   
Speaking at a joint news conference in Moscow with Angolan Foreign Minister Georges Chikoti, Lavrov reiterated Moscow's call for constitutional reforms in Ukraine to guarantee the rights of Russian speakers there.

The Russian Foreign Ministry also called on Kiev's authorities to stop massing military forces it said were tasked with suppressing anti-government protests in southeastern Ukraine.   

Pro-Russian protesters seized official buildings in the eastern cities of Kharkiv, Luhansk and Donetsk on Sunday night, demanding that referendums be held on whether to join Russia like the one that preceded Moscow's takeover of Crimea.

Meanwhile, Ukrainian Interior Minister Arsen Avakov said that Ukraine has launched an "anti-terrorist" operation in the eastern city of Kharkiv and about 70 "separatists" have been arrested for seizing the regional administration building.

On his Facebook page, Avakov said: "An anti-terrorist operation has been launched. The city center is blocked along with metro stations. Do not worry. Once we finish, we will open them again."

Ukraine's Interior Ministry was quoted as saying by Interfax-Ukraine news agency that those detained were suspected of "illegal activity related to separatism, the organization of mass disorder, damage to human health" and breaking other laws.

EU:

The European Union will set up a special support group to help Ukraine stabilise its precarious economy and political situation, an EU diplomat said on Tuesday.
   
Concern is growing that Moscow could be preparing for further military action in Ukraine and on Tuesday U.S. Secretary of State John Kerry accused Russian agents and special forces of stirring separatist unrest in eastern Ukraine.
   
The support group, whose creation is expected to be announced on Wednesday, would bring together "several dozen people" to work out priorities for Ukraine, an EU diplomat said, asking not to be named.

Russia's top natural gas producer Gazprom said Ukraine had failed to pay on time for March gas supplies and its debt stood at $2.2 billion.

"They haven't paid for March," a spokesman said, confirming that Ukraine's total debt of $2.2 billion had not been reduced.

He declined to say what, if any, action Gazprom would take.

Ukraine's energy company Naftogaz declined immediate comment.

The International Monetary Fund cut its 2014 economic growth forecast for Russia by two-thirds on Tuesday and warned that downside risks remain on geopolitical uncertainties after Moscow's takeover of Crimea.

The Fund cut its gross domestic product (GDP) growth forecast to 1.3 percent from an earlier 2 percent, revising down its estimates for the third time in a row, from an initial 3 percent.

The IMF forecast follows gloomier estimates from the World Bank of the likely economic damage from the Kremlin's standoff with the West over Ukraine. The bank warned the Russian economy may contract by 1.8 percent if the conflict escalates and grow by 1.1 percent at best.

The IMF is also more optimistic in its GDP growth estimates than the Russian Economy Ministry, which said earlier this month that economic expansion may come "significantly" below 1 percent if current trends continue.

The United States and European Union have imposed asset freezes and visa bans on a group of Russians and threatened economic sanctions if Moscow escalates the crisis further. The standoff is estimated to result in up to $70 billion in capital flight from Russia in the first quarter.

The World Bank says capital outflow may come to $150 billion if the crisis deepens. The IMF has not provided estimates of how much money could flee Russia this year.

The Fund said Russia's slowdown would have a spillover effect on former Soviet republics such as Kazakhstan, Armenia or Taijikistan.

This as, a Russian deputy economy minister said he did not rule out weaker European demand for Russian oil and gas due to tension over Ukraine.
   
Andrei Klepach also told reporters that Ukraine is likely to reduce Russian gas purchases this year to 20 billion cubic metres, from 25.8 billion in 2013, because of difficulties paying for deliveries.
   
"This is not (a result of) sanctions, but one may anticipate a certain decrease in demand for our hydrocarbons both from Ukraine and from European countries," he said.

This comes after U.S. Secretary of State John Kerry squarely blamed Russian agents for separatist unrest in eastern Ukraine, saying Moscow could be trying to lay the groundwork for military action like in Crimea.
   
"It is clear that Russian special forces and agents have been the catalyst behind the chaos of the last 24 hours," Kerry told lawmakers, adding this "could potentially be a contrived pretext for military intervention just as we saw in Crimea."

Earlier, Britain said that events in eastern Ukraine looked to be part of a Russian strategy to destabilize the country, saying it was "gravely concerned" by pro-Russian protesters' seizure of government buildings.
       
In turn, NATO's Secretary General said that events in eastern Ukraine were cause for great concern and called on Russia to pull back troops from the border with its neighbor.

"Events in eastern Ukraine are a great concern, I urge Russia to step back," Anders Fogh Rasmussen told a NATO conference in Paris. "Any further move to eastern Ukraine would represent a serious escalation rather than de-escalation."

He added that Russia had to pull back the "tens of thousands of troops" that had massed on Ukraine's borders.