Rebels Fight back in Ukraine as West Throws Weight behind Truce Bid

Pro-Russian rebels on Wednesday fought troops to try to regain strategic positions in east Ukraine, while the West threw its weight behind a last-ditch diplomatic bid to calm the crisis ahead of a crucial presidential election.

The head of the OSCE was in Moscow to appeal to Russian President Vladimir Putin to help calm hostilities in the former Soviet republic.

At the same time, British Foreign Secretary William Hague was in Kiev to reassure its government of Western support as it struggles to contain the separatists, warning that it would be a "blow to democracy" if Russia prevents the May 25 election.

Combat and clashes have claimed nearly 90 lives in the past week as Ukraine's military wages an operation to push back insurgents who are planning an independence referendum on Sunday.

Rhetoric has also sharpened in the lead-up to celebrations on Friday in Russia and Ukraine of the Soviet victory over German forces in World War II, with both countries accusing each other of Nazi-like "fascism".

Ukraine's interior ministry said an hour-long battle occurred on a road in the southeastern region, between the cities of Mariupol and Berdyansk, after rebels fired on a bus carrying special force troops.

"The bus driver was wounded, one of the attackers was killed, another two were captured," the ministry said in a statement.

The rebels' self-styled defense minister Igor Kakidzyanov was one of the two prisoners, it said.

Ukrainian security forces stormed the separatist-held town hall in Mariupol, which is located near the Russian border, clearing it out and hoisting the national flag above the building.

But just as quickly, the soldiers left when several hundred pro-Russian protesters massed outside.

"They want to stop us from holding the referendum," Sergei Kostinyuk, a 27-year-old factory worker who helped retake the building from the troops, told AFP.

Around Slavyansk, a rebel-held flashpoint town in the east where most fighting has been concentrated, more skirmishes were reported. Russia's Interfax news agency said pro-Moscow gunmen were trying to recapture the town's TV tower from soldiers who had overrun it two days ago.

In Slavyansk itself, a rebel spokeswoman told AFP that the insurgents were ready to clear out of the town hall they have barricaded themselves inside for nearly a month, depending on the situation. A Russian flag that had been flying over the building was missing on Wednesday.

Ukrainian officials say they are moving cautiously towards the center of Slavyansk, which has a population of more than 110,000, to avoid civilian casualties.

The interior ministry said it had information that the rebels had booby-trapped the buildings they occupied in the town with explosives, "to accuse Ukrainian authorities of bombing civilians".

Since last Friday, the rebels have lost more than 30 fighters in the battle for Slavyansk, while the Ukrainian military has had nine troops killed and three helicopter gunships shot down.

In the southern port city of Odessa, tensions remained high after clashes Friday resulted in 42 deaths, most of them pro-Russian activists who died in an inferno started when Molotov cocktails were traded with pro-Kiev activists.

Fears over the worsening violence in in Ukraine are growing, sending shivers through stock markets and sparking widespread concern.

French President Francois Hollande warned Tuesday of "chaos and the risk of civil war" if Ukraine is unable to go ahead with the May 25 election the West sees as vital to restoring political stability.

Germany too has said it fears an all-out military conflict, as Putin weighs whether to launch an invasion with the estimated 40,000 troops he has stationed on the border.

With relations between Moscow and the West plumbing depths not seen since the end of the Cold War, the United States and Russia continued to trade barbs as the clock ticked towards the separatists' independence referendum this weekend.

U.S. Secretary of State John Kerry dismissed the planned vote as "bogus" and drew parallels with a referendum in Crimea that was annexed by Russia in March.

"This is really the Crimea playbook all over again, and no civilized nation is going to recognize the results of such a bogus effort," Kerry told reporters.

"We flatly reject this illegal effort to further divide Ukraine."

Ignoring Moscow's denials, the West accuses Russia of stoking tension to destabilise Ukraine ahead of the presidential election. Moscow, though, says it would be "absurd" to hold the poll amid the current unrest.

The head of the Organization for Security and Cooperation in Europe, Swiss President Didier Burkhalter, was to meet Putin after Moscow quashed a German-led plan for new peace talks.

He has urged a ceasefire to allow Ukraine's election to take place, after the collapse of an April 17 peace deal clinched in Geneva.

Russian Foreign Minister Sergei Lavrov on Tuesday, after a meeting with around 30 European foreign ministers in Vienna, said a further peace push would be a waste of time unless the separatists were invited to the table.

Meanwhile, tensions between Russia and Ukraine were being loaded with historical jabs ahead of World War II V-Day commemorations on Friday.

Each was trying to portray the other as the ideological offspring of Nazi fascists who are threatening democratic order.

Putin will on Friday oversee a display of Russia military might in the iconic Red Square in Moscow. But celebrations will be more muted in Kiev amid fears of pro-Russian "provocation".

The West has warned Moscow it will step up sanctions on Russia's recession-threatened economy if it continue to sow chaos in its western neighbor.

U.S. President Barack Obama has warned the sanctions will be broadened to include whole sections of Russia's economic activity.

The limited sanctions so far in place have stimulated a heavy capital flight from Russia, hobbled a bank close to Putin and hammered economic growth.

Ukraine, in contrast, on Wednesday received the first $3.2-billion tranche of a Western-backed financial rescue package from the International Monetary Fund.