INTENSE fighting between Ukrainian troops and pro-Russian rebels in eastern Ukraine has killed dozens of civilians, soldiers and rebels, as Kiev pressed on with an offensive near the wreckage of Malaysian flight MH17.

Shells hit the centre of Donetsk, a city with a pre-war population of nearly a million people where residents fear they will be trapped on a battlefield between advancing Ukrainian troops and Russian-backed rebels who have vowed to make a stand.

In Brussels, European officials met to discuss imposing the first broad-based sanctions aimed at sectors of the Russian economy, a step that would start a new phase in the biggest confrontation between Russia and the West since the Cold War.

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Ukrainian forces have been pushing rebel units back towards their two main urban strongholds of Donetsk and Luhansk and have sought to encircle them in several places.

The government says its forces have retaken several villages in the rolling countryside near where the airliner crashed on July 17, killing all 298 passengers, most of them Dutch.

Municipal officials said up to 17 people, including children, were killed in fighting on Monday evening in the town of Horlivka, a rebel stronghold north of Donetsk.

Rebel leaders insist Moscow is not supplying them. Russia also denies Western accusations it is supporting the rebellion with arms and troops.

The violence has frustrated international experts' efforts to access the plane crash site for a third day. Dutch police again abandoned plans to travel to the site because of fighting.