West warns Russia of sanctions amid Ukraine fighting

German Chancellor Angela Merkel said in Berlin that new sanctions could be applied if efforts to stabilise the situation were not speeded up.

UK Foreign Secretary William Hague said inaction by Russia would mean a stronger case for sanctions.

President Petro Poroshenko said violations might end the truce.

However, his Foreign Minister, Pavlo Klimkin, told reporters at a Nato meeting in Brussels on Wednesday that Ukraine would "stick to our unilateral ceasefire," which began on Friday.

On Tuesday, a Ukrainian military helicopter was shot down with the loss of nine lives, with reports of fighting overnight near the Russian border in Luhansk region.

The Ukrainian military accused the rebels on Wednesday of breaking the ceasefire 44 times since it began.

But Alexander Borodai, prime minister of the self-styled Donetsk People's Republic, has said there is effectively no ceasefire because of government attacks.

The truce is part of Ukraine's plan to end two months of conflict with pro-Russian insurgents who control key buildings in towns and cities across the east.

More than 420 people have been killed in the region since mid-April, the UN estimates.

Analysis: David Stern, BBC News, Kiev

One would suspect that the Ukrainian government's truce in the east is now a dead letter. Public outrage alone would seem to demand some sort of military retaliation.

And if the Ukrainian government uses force, then very likely the Ukrainian insurgents and their Russian comrades-in-arms will answer in kind. An escalation seems inevitable.

At this point, it is close to impossible to determine why the militants decided to carry out such a provocative act, just one day after they declared a ceasefire. Maybe this was some rogue element. Maybe the insurgents were never serious. Maybe Moscow told them to do it.

Whatever the reason, the hopes of just 24 hours ago, that Ukraine's east could finally see peace, if only temporarily, ring especially hollow.

Russian and Ukrainian media consider Putin step

President Poroshenko is expected to unveil proposals for constitutional reform to give regions greater self-government when he attends parliament on Thursday.

On Friday, he is due to sign the long-delayed association agreement with the European Union - a pact rejected in January by then President Viktor Yanukovych under pressure from Russia.

'Sanctions can return'

Mrs Merkel welcomed the surprise decision by Russian President Vladimir Putin to cancel a parliamentary resolution authorising him to use Russian forces in Ukraine.

She told the German parliament the move was "psychologically important" but warned that sanctions "can be put back on the agenda" if Ukrainian soldiers continued to die.

UK Foreign Secretary William Hague, who was also in Brussels for a meeting of Nato ministers, said the downing of the helicopter was hard to reconcile with Mr Putin's avowed support for peace.

Nato chief Anders Fogh Rasmussen said Moscow was "using a new different type of warfare against Ukraine" and he promised a "package of long-term support measures for Ukraine".

Russia denies claims that it is encouraging and arming the separatists.

New fighting

The separatist commander in the rebel stronghold of Sloviansk, Donetsk region, announced on Wednesday that his forces had shot down the helicopter.

In a statement, Igor Strelkov accused government forces of bombarding local villages with artillery and mortars.

A dawn mortar attack by the rebels on Wednesday inflicted "significant losses" on government forces near Sloviansk, he added.

An AFP news agency crew visiting Sloviansk reported hearing a "wave of shelling being launched by Ukrainian forces" on Wednesday morning. This was met by the rebels with "extended rounds of anti-aircraft and heavy machine-gun fire".

There were also fresh clashes in Luhansk region on Wednesday, with Ukrainian MP Oleh Lyashko telling press that guards had come under attack 2km (1.2 miles) from the Russian border.

Insurgents agreed on Monday to observe a ceasefire, proposed by the Ukrainian government, until Friday.