Pro-Russian rebels have pounded encircled Ukrainian government forces and Kiev said it would not pull back heavy guns while a truce was being violated, leaving a European-brokered peace deal on the verge of collapse a day after it took effect.
The EU announced a new list of Ukrainian separatists and Russians targeted with sanctions, to which Moscow promised an "adequate" response.
Fighting had subsided in many parts of eastern Ukraine after a ceasefire came into force from Sunday, under a deal reached last week in marathon talks involving the leaders of France, Germany, Russia and Ukraine.
But the truce appears to have been stillborn in the part of the front where the most intensive fighting has taken place in recent weeks.
Rebels announced hours after it came into effect that they had no intention of observing the ceasefire at the town of Debaltseve, where they have been advancing since January and now have a Ukrainian unit all-but encircled.
Washington says the rebel operation around the town, which sits on a strategic railway hub, is being assisted by the Russian armed forces, which Moscow denies.
Kiev said its forces were shelled more than 100 times after the truce took effect. Military spokesman Andriy Lysenko said government troops could not pull back their own heavy weapons, as set out in the agreement reached in the Belarussian capital Minsk, without a ceasefire that held.
"The pre-condition for withdrawal of heavy weapons is fulfilling Point One of the Minsk agreements - the ceasefire. One hundred and twelve attacks are not an indicator of a ceasefire. At the moment we are not ready to withdraw heavy weapons," Lysenko told a news briefing in Kiev.
The military in Kiev said five of its soldiers had been killed and 25 wounded since the ceasefire took effect.
In Berlin, German Chancellor Angela Merkel's spokesman, Steffen Seibert, said it was important the withdrawal of heavy weapons begins as scheduled today.
Mrs Merkel was the driving force behind intensive diplomacy to end the war last week, flying to Kiev, Moscow and Washington before staying up all night for the talks in Minsk that produced Thursday's deal.
The EU's new list of 19 people and nine organisations hit by asset freezes and travel bans was dominated by Ukrainian separatists but also targeted popular Russian singer Iosif Kobzon - sometimes dubbed Russia's equivalent of Frank Sinatra - and two Russian deputy defence ministers.
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