Ukraine troops attack rebel-held town

Ukraine's army has launched what insurgents say is a full-scale military assault on the flashpoint town of Slavyansk, raising the stakes in the stand-off with Russia, which has vowed "catastrophic consequences" if Kiev steps up operations.

Gunfire and three explosions were heard near the rebel-held town early on Friday and a spokeswoman for the insurgents in control of Slavyansk claimed their fighters shot down a Ukrainian helicopter.

"This is a full-scale attack," she said.

Ukrainian Interior Minister Arsen Avakov later confirmed a military helicopter had been shot down during an assault on the outskirts of Slavyansk and a pilot had been killed.

An AFP reporter on the scene saw a column of eight armoured vehicles breaching a rebel-held checkpoint just south of Slavyansk .

The raid marked a dramatic escalation in the crisis and came a day after Ukraine's interim president reintroduced conscription amid fears of an imminent Russian invasion.

Oleksandr Turchynov has also put his armed forces on "full-combat alert" in response to the estimated 40,000 Russian troops massed on the border.

He has admitted his authorities are powerless to stop a growing insurgency in the eastern part of the country, where pro-Russian rebels have seized control of more than a dozen towns and cities.

US President Barack Obama was due to discuss the tensions with German Chancellor Angela Merkel at the White House later on Friday.

Russia's foreign ministry said on Thursday that any effort by Kiev to intensify its military operation "against its own people" in the east could have "catastrophic consequences".

The military advances in Slavyansk could also jeopardise efforts to free 30 to 50 hostages being held in Slavyansk, including seven European monitors from the OSCE.

Hopes had been raised in recent days that the seven - four Germans, a Dane, a Czech and a Pole - might soon be released as the self-styled rebel mayor Slavyansk, Vyacheslav Ponomaryov, said negotiations were going well.

Germany appealed to Russian President Vladimir Putin to intervene to win the monitors' freedom. The Kremlin strongman responded that Kiev should end its military operations in rebel-held territory.

That sparked a derisive response from the White House.

A spokesman said: "That was a rather remarkable statement... (calling) on Ukraine to remove its forces from its country, which is preposterous, if you think about it."

The West and Kiev believe the chaos in eastern Ukraine is being sown by Moscow in a bid to destabilise the former Soviet republic ahead of planned presidential elections on May 25.

The Western response has been to launch sanctions against members of Putin's inner circle and target key firms in a bid to attack Russia's already recession-hit economy.

Moscow has reacted angrily, threatening to retaliate against Western interests in the lucrative energy sector.