Residents said it was the first time there had been shelling in the area. Two minivans and one car with about a dozen separatist fighters were heading to the area where the sound of the blasts was coming from. Two ambulances were seen coming from the neighborhood.
Meanwhile, a military spokesman said seventeen bodies have so far been recovered from the wreckage of a Ukrainian refugee convoy which was hit by shelling on Monday. Six others were being treated in hospital for injuries, of whom three were in a serious condition, the spokesman, Andriy Lysenko, said.
The attack occurred near the city of Luhansk, close to the border with Russia, in an area where there had been intense artillery exchanges between government forces and pro-Russian separatists.
The Kiev military blamed the attack on the rebels, but they have denied responsibility. At least one rebel leader suggested no attack had occurred.
The military said on Monday that many of those killed, who included women and children, had been burned beyond recognition. Many bodies had been blown apart by the blast.
Ukrainian government forces have been fighting separatists for four months in the Russian-speaking east of Ukraine. The rebels have set up 'people's republics' and said they want to join Russia.
Ukraine says Russia, which seized the Crimean peninsula in March after a pro-Western government took power in Kiev, has orchestrated the uprisings and is arming the rebels with tanks, missiles and other heavy weaponry. Moscow denies this. Ukrainian President
Ukrainian President Petro Poroshenko will pay a working visit to Brussels on August 30 at the invitation of top European Union officials, the presidential website said on Tuesday. Poroshenko confirmed he would accept the invitation in a telephone conversation with European Commission President Jose Manuel Barroso, it said.
Germany's Angela Merkel will hold talks in Ukraine on Saturday with national and local leaders aimed at boosting efforts to support the government in Kiev in its struggle against pro-Russian rebels, German and Ukrainian officials said on Tuesday.
During the visit, which takes place on the eve of Ukraine's Independence Day celebrations, Merkel will meet President Petro Poroshenko and Prime Minister Arseny Yatseniuk as well as the mayors of some Ukrainian cities, the chancellor's office said.
"The current situation in Ukraine and the relationship with Russia will be at the heart of all the talks," her office said in a statement, adding that their discussions would also cover "concrete options for supporting Ukraine in the current crisis".
The latest round of top-level diplomatic talks in Berlin on Sunday with the Russian, Ukrainian, German and French foreign ministers ended with no apparent progress towards a ceasefire between the government and separatists.
The ministers are now consulting with their governments to decide whether to continue talking by telephone.
The four-month conflict in the Russian-speaking east has reached a critical phase, with Kiev and the West watching to see if Russia will use troops massed along its border to intervene in support of the increasingly besieged rebels.