Seven European OSCE inspectors were freed on Saturday in a flashpoint town in east Ukraine, where surrounded pro-Moscow rebels are battling a fierce military assault amid a soaring national death toll.
The unexpected release was a bolt of good news in Ukraine's startling descent into chaos, after a bloody day in which more than 50 people died — most of them in a horrific inferno in the southern city of Odessa.
But the international crisis over Ukraine deepened, with Russia saying it would now be "absurd" for the ex-Soviet republic to hold a planned May 25 presidential election.
That opened the risk of sweeping US sanctions against Russia after President Barack Obama warned of punishment if perceived Moscow meddling scuppered the poll.
Meanwhile, on the outskirts of Slavyansk, where the OSCE team was held, AFP journalists witnessed a ferocious firefight between Kalashnikov-armed insurgents and soldiers outflanking their checkpoint.
One man was shot dead and lay in the road, while a fatally wounded driver gasped for breath at the wheel of his car, said the journalists, who were briefly pinned down between both sides. Armoured vehicles fired occasional heavy-calibre rounds at the outnumbered insurgents.
At least nine people died the day before around Slavyansk, when the military tightened its noose on the town but lost two helicopter gunships to shoulder-launched missiles in the process.
All of Ukraine was reeling Saturday at news of 42 deaths the day before in the southern city of Odessa, where pro-Russian and pro-Kiev militants clashed savagely and repeatedly.
Most of the deaths — many believed to be pro-Russians — occurred in a trade union building set alight as each side lobbed Molotov cocktails at the other.
Acting president Oleksandr Turchynov declared two days of mourning over the loss of lives across the country.
Russia slammed the violence and blamed it on Kiev and on ultranationalists it says make up Ukraine's new Western-backed government.
"Extremists and radicals burnt alive absolutely unarmed people," Putin's spokesman Dmitry Peskov said, according to the state news agency RIA Novosti.
"Those who deem this Kiev junta legitimate authorities are becoming a party to this crime," he said.
The Kremlin added that Russia had lost any influence it had over the armed separatists, and that it had received "thousands of calls" from eastern Ukraine requesting "active help".
Russian President Vladimir Putin — whom the West sees as masterminding Ukraine's insurgency despite his denials — has kept an estimated 40,000 of his troops massed on Ukraine's border for the past two months. He has said he "very much hopes" he will not have to order them to invade.
'Never forgive them'
Moscow claims the rebels are "protesters" and spontaneously created "self-defence units" and rejects accusations that Russian military and intelligence commanders are leading them.
However the OSCE inspectors, who had been held in Slavyansk for over a week, were freed shortly after a Kremlin envoy arrived in east Ukraine.
Vladimir Lukin, Russia's human rights commissioner, told Russian media he secured their release "as a goodwill humanitarian act and we are very grateful to the masters of the city".
The European inspectors, though, were bitter towards their captors, who had at one point led them out under armed guard to speak to a media conference.
"I will never forgive them," one of the released OSCE inspectors told reporters.
Russia on Friday called an emergency UN Security Council meeting in which it laid the blame for Ukraine's unrest on Kiev, which is run by a Western-backed government it deems illegitimate.
The bloodshed was the worst the Kiev government has faced since taking charge in late February, after months of street protests forced the ouster of Kremlin-friendly president Viktor Yanukovich.
It admitted this week its police forces in east Ukraine were helpless against the rebellion, which has seized public buildings and television transmitters in more than a dozen towns.
The acting president has responded by reintroducing conscription and put the country's armed forces on "full combat alert" as he turned to the military to keep order.
Interior Minister Arsen Avakov, who went to the east with the defence minister to supervise the stepped-up operations, said on Saturday the army was in the "active phase" of the operation to clear rebels from the east, declaring: "We will not stop."
Fighting was continuing on the outskirts of Slavyansk, but there appeared to be no push to take the town itself, which has a population of 160,000 broadly sympathetic to the pro-Russian rebels.
In nearby Kramatorsk, soldiers overran a security services building and a television station the rebels had taken, officials said.
Violence in Odessa
Kiev meanwhile blamed Russia for triggering the violence that gripped Odessa on Friday. Before then, the city of one million on Ukraine's Black Sea coast had been spared the unrest raging in the east.
Odessa is located close to the border with Moldova — and its breakaway state of Transdniestr, where Russia has troops stationed since a short war in 1992.
Both the United States and Russia condemned the Odessa violence. The building fire there created horrific scenes of dozens killed from smoke inhalation and others perishing by jumping out of windows.
Russia said it was "outraged" by the incident and called on Kiev and the West to "end the anarchy".
The US State Department called the loss of life "heartbreaking" and "unacceptable".
Obama on Friday warned Russia that, if "disruptions and the destabilisation" scupper the May 25 election in Ukraine, "we will not have a choice but to move forward with additional… severe sanctions".
They would go beyond the ones currently targeting firms and individuals close to Putin to hammer whole sectors of the recession-hit Russian economy, he said.
Previously, the United States had said such drastic sanctions — reminiscent of the harshest periods of the Cold War — would only be used if Russia invaded Ukraine.
Russia has so far not responded with sanctions of its own, but has said it could turn off gas supplies to Ukraine — and by extension to western Europe.
That measure would undermine the European Union's fragile economic recovery, but also prove a hard blow to Russia's faltering revenues.
