Ukraine's acting president, Oleksander Turchinov, said on Friday Ukrainian border troops had rebuffed attempts by Russian "armed saboteurs" to cross into Ukraine overnight.
Turchinov also said in a statement the operation to retake the eastern town of Slaviansk had not progressed as quickly as he had hoped, complicated by pro-Russian rebels hiding "behind the citizens" and "firing from apartment blocks".
"We demand that the terrorists, saboteurs, all those who took up arms against our country, to lay down their arms, surrender, release hostages and administrative buildings," he said.
Earlier, Ukraine categorically denied Russian attempts to blame Kiev for breaking a deal agreed in Geneva last month, saying that Moscow had failed to take any steps to de-escalate the situation in Ukraine's east.
In a statement, the foreign ministry said that Ukraine was ready to negotiate with a Russian envoy to try to find a way out of the crisis, but that Kiev had not been informed of his arrival in eastern Ukraine.
Meanwhile, two Ukrainian troops were killed when two helicopters were shot down over the separatist-held eastern town of Slaviansk, the Defense Ministry said.
"As a result of the shooting, two troops from the Ukrainian army were killed," the ministry said in a statement.
Ukrainian forces launched a "large-scale operation" to retake the eastern town of Slaviansk, pro-Russian separatists holding the town said, as security deteriorated in a crisis that has provoked the biggest confrontation between Russia and the West since the Cold War.
A Reuters photographer said he saw a military helicopter open fire on the outskirts of the town and a reporter heard gunfire. Separatists said they were under attack and that at least one helicopter had been shot down.
Vyacheslav Ponomaryov, the self-declared mayor or the town, was quoted by Russia's Interfax news agency as saying two helicopters had been shot down and one pilot had been detained. Another had been killed.
Armed groups seeking union with Russia have seized a number of government buildings in towns in eastern Ukraine. The action in Slaviansk, if confirmed, would mark the first significant military response by Kiev.
Also on Friday, pro-Russian separatists left the prosecutor's office and television center in Ukraine's eastern city of Luhansk, the Interior Ministry said.
"The (prosecutor's) office was freed today thanks to negotiations between the local authorities and people who had seized the building," the ministry said in a statement. It said in another report that separatists had also left the television center.
Both were seized on Tuesday.
Gas supply
Russia's Gazprom will reduce gas supply to Ukraine in June if it receives no prepayment in May, Russia's Energy Minister Alexander Novak said on Friday.
He also expressed concern that Ukraine could be unable to store enough gas during the summer months for transit to European countries for the winter season.
Reactions
Russian President Vladimir Putin's spokesman said on Friday that Kiev had launched a "punitive operation" in south-east Ukraine, destroying the final hope of keeping alive an accord intended to defuse the Ukraine crisis, Russian news agencies reported.
They quoted spokesman Dmitry Peskov as saying Putin had sent a representative to the area for talks about freeing captured Organization for Security and Cooperation in Europe observers but that the Kremlin had not been in contact with him since the operation began.
Putin's spokesman said that Kiev would be held responsible "first of all by its people" for its decision to launch a "punitive operation" in south-east Ukraine.
Speaking on Rossiya 24 television, he called on Europe and the United States to give their assessment of the situation in the area, where "aviation is being used against the population" and urged Kiev to think again about its actions, according to the report.
In turn, the European Union said it was watching events in eastern Ukraine with growing concern, calling on pro-Russian separatists to leave occupied buildings and release people they were holding.
"We are following with growing concern the events in eastern Ukraine," Maja Kocijancic, a spokeswoman for EU foreign policy chief Catherine Ashton, told reporters.
The EU called for an end to all "illegal actions" by armed separatist groups. "Occupied buildings need to be vacated, all persons illegally detained need to be released, including the OSCE military observers," she said.
In the same regard, EU foreign policy chief Catherine Ashton said it was crucial to see a reduction in violence and the occupation of buildings in crisis-stricken Ukraine.
"It is absolutely vital that we do not see continuing violence, it's absolutely vital that we see occupations of buildings reduced," she said during a joint press conference with German Foreign Minister Frank-Walter Steinmeier in Berlin.
"It is absolutely vital, as I have said to everyone, that we see the functioning of the Rada, the parliament, as being the place where all representatives of Ukraine can work together."
Steinmeier called for the urgent implementation of the deal struck in Geneva last month between Ukraine, Russia, the United States and the European Union to ease tensions in Ukraine.
REUTERS