Russia Vows Response if 'Interests' in Ukraine Attacked, Kiev Says 'Liberated' Svyatogorsk

Russia issued a sharp warning on Wednesday that it will strike back if its "legitimate interests" in Ukraine are attacked, raising the stakes in the Cold War-like duel with the United States over the former Soviet republic's future.

Meanwhile, Ukraine's interior ministry said the military has "liberated" the eastern town of Svyatogorsk from pro-Kremlin separatists.

The town, around 15 kilometers north of the flashpoint city of Slavyansk, was one of around 10 the rebels had been occupying for more than a week.

Earlier on Wednesday, Russian Foreign Minister Sergei Lavrov said: "If we are attacked, we would certainly respond."

"If our interests, our legitimate interests, the interests of Russians have been attacked directly, like they were in South Ossetia for example, I do not see any other way but to respond in accordance with international law," he told state-controlled RT television, referring to Russia's armored invasion of Georgia in 2008.

Moscow also insisted that Kiev withdraw the forces it has sent into eastern Ukraine to dislodge pro-Russian rebels who have seized control of government buildings in several towns.

Both Kiev and Washington believe the current crisis is being deliberately fueled by Russian President Vladimir Putin in a bid to restore former Soviet glory.

"The Russian side once again insists on the immediate de-escalation of the situation in Ukraine's southeast, the pullback of units of the Ukrainian army and the start of a genuine internal Ukrainian dialogue involving all of the country's regions and political formations," the foreign ministry said.

"Moscow is extremely surprised by the distorted interpretations by Kiev authorities as well as by our U.S. partners of the contents of a declaration adopted in Geneva on April 17 as a result of a four-way meeting between representatives of Russia, the United States, the European Union and Ukraine."

The Kremlin has an estimated 40,000 Russian troops poised on Ukraine's eastern border, prompting Washington on Wednesday to start deploying 600 US troops to boost NATO's defenses in eastern European states neighboring Ukraine.

The first unit of 150 U.S. soldiers arrived in Poland on Wednesday, with the remainder arriving in Estonia, Lithuania and Latvia in the coming days.

Reports of two journalists -- an American and a Ukrainian -- being held in the flashpoint rebel-held town of Slavyansk have done nothing to ease the mounting tensions.

The U.S. State Department said it was "deeply concerned about the reports of a kidnapping of a U.S. citizen journalist in Slavyansk, Ukraine, reportedly at the hands of pro-Russian separatists".

The town was also the source of gunfire that damaged a Ukrainian military reconnaissance plane on Tuesday, and the site of a crime scene for two bodies that Ukraine's acting president, Oleksandr Turchynov, said had been "brutally tortured".

One of the two victims was believed to be a local politician and member of Turchynov's party, which the president used as justification to relaunch "anti-terrorist" operations against the insurgents on Tuesday.

Deputy Prime Minister Vitaly Yarema said security forces had been activated "to liquidate all the groups currently operating in Kramatorsk, Slavyansk and the other towns in the Donetsk and Lugansk regions," according to the Interfax Ukraine news agency.

The spiraling violence -- coupled with America and Russia both accusing each other of inflaming the situation through the use of proxies in Ukraine -- has scuppered a Geneva accord agreed last week between Ukraine, Russia and the West which was meant to move Ukraine away from the brink of civil war.

Russia said it wants Kiev to pull back its army units and start a "genuine internal Ukrainian dialogue involving all of the country's regions".

Lavrov accused the U.S. of orchestrating the new offensive, noting that it was announced immediately after a two-day visit from U.S. Vice President Joe Biden to Kiev.

"The Americans are running the show," he told RT.

There were no immediate reports of any confrontation between the Ukrainian military and the pro-Moscow fighters.

In Slavyansk on Wednesday, the streets were calm, with locals walking about as usual.

A handful of rebels wearing camouflage gear and ski masks but with no apparent weapons stood outside the barricaded town hall they are occupying.

In front of the building were three photos of militants killed in a weekend attack on a nearby roadblock that the separatists have blamed on pro-Kiev ultra-nationalists.

The local rebel leader, Vyacheslav Ponomaryov, who styles himself as Slavyansk's "mayor" told a news conference that the two journalists being held were unharmed.

The American journalist is Simon Ostrovsky of Vice News, who used to be employed by AFP in Azerbaijan. The Ukrainian is Irma Krat, who appears to work for her own pro-Kiev outlet.

Ponomaryov asserted that Ostrovsky "is not being detained, was not abducted, has not been arrested" and claimed he was "working" in one of the rebel-occupied buildings.

However the Twitter feed of the normally prolific journalist has been inactive for over a day.

Vice News said in an online statement that it was "aware of the situation, and is in contact with the U.S. State Department and other appropriate government authorities to secure the safety and security of our friend and colleague, Simon Ostrovsky".

The State Department's spokeswoman Jen Psaki condemned the abductions and said in a statement: "We call on Russia to use its influence with these groups to secure the immediate and safe release of all hostages in eastern Ukraine."

Washington has also underlined its worry about "the lack of positive Russian steps to de-escalate" the crisis.

Sanctions, on top of those already imposed on President Vladimir Putin's inner circle, will follow if no progress is made soon, it warned.

Prime Minister Dmitry Medvedev has acknowledged his nation's economy was facing an "unprecedented challenge" with recession looming, but Russia has nonetheless dismissed the threat of sanctions and insists it has the right to protect the Russian-speaking population in Ukraine.