Pro-Russian Ukrainian rebels are receiving new armored vehicles and fighters trained in Russia, with which they plan to launch a major counter-offensive against government forces, a separatist leader said in a video released on Saturday.
The four-month conflict in eastern Ukraine has reached a critical phase, with Kiev and Western governments watching nervously to see if Russia will intervene in support of the increasingly besieged rebels - an intention Moscow denies.
Alexander Zakharchenko, prime minister of the self-proclaimed Donetsk People's Republic, said the rebels were in the process of receiving some 150 armored vehicles, including 30 tanks, and 1,200 fighters who he said had spent four months training in Russia.
"They are joining at the most crucial moment," he said in a video recorded on Friday. He did not specify where the vehicles would come from.
Moscow has come under heavy Western sanctions over its annexation of Ukraine's Crimea and accusations it is supporting separatists in east Ukraine with fighters, arms and funds. Russia denies those charges.
In a sign of concern at the latest rebel comments, German Chancellor Angela Merkel and Ukrainian President Petro Poroshenko agreed in a phone call on Saturday that deliveries of weapons to separatists in Ukraine must stop and a ceasefire must be achieved, a German government spokesman said.
The risk of outright war between the two most powerful former Soviet states was highlighted on Friday when Ukraine said it partially destroyed an armored column that had crossed the border from Russia. The report triggered a sell-off in global shares.
But Moscow made no threat of retaliation, instead saying it was a "fantasy" that its armored vehicles had entered its neighbor's territory.
U.S. Vice President Joe Biden also spoke to Poroshenko on Saturday, and the White House said: "The two leaders agreed that Russia's sending military columns across the border into Ukraine and its continued provision of advanced weapons to the separatists was inconsistent with any desire to improve the humanitarian situation in eastern Ukraine."
Ukrainian Foreign Minister Pavlo Klimkin called on NATO to provide military support for Ukrainian troops.
The rebels, who have ceded ground to government forces in recent weeks, have been promising a counter-offensive for several days but have yet to launch one.
Ukrainian native Zakharchenko took over from Russian citizen Alexander Borodai last week and his combative comments will probably dash hopes that changes at the top of the rebel leadership might signal willingness to end hostilities.
Adding to the tensions, Russia and Ukraine have been at loggerheads for days over a convoy of 280 Russian trucks carrying water, food and medicine, which remained about 20 km (12 miles) from the Ukrainian border, unmoved since Friday.
Officials from the International Committee of the Red Cross said most procedures had been agreed by Russia and Ukraine but the two sides still needed to figure out how to provide security before the convoy moves ahead under the ICRC's aegis. It was not clear when a deal on security could be agreed.
Russia says it is a purely humanitarian mission in support of civilians in areas hit by the conflict, but Ukraine is concerned it could serve as a Trojan Horse to infiltrate military supplies or create a pretext for armed intervention.
The crisis has dragged relations between Russia and the West to their lowest point since the Cold War and set off a round of trade restrictions that are hurting struggling economies in both Russia and Europe. The United Nations said this week that an estimated 2,086 people had been killed, with nearly 5,000 wounded.
The Finnish President, Sauli Niinisto, held talks in Kiev with Poroshenko, a day after discussing how to settle the crisis with Russian President Vladimir Putin.
"I do not see a great risk of an outright war," Niinisto said. "My hopefulness is based on the fact that communication is open, at least by a crack."
France said a meeting of Ukrainian, Russian, German and French foreign ministers scheduled in Berlin on Sunday could be a first step towards a peace summit.
A rebel Internet news outlet said on Saturday that separatist fighters had killed 30 members of a Ukrainian government battalion in fighting in Luhansk province, a rebel-held area of eastern Ukraine adjacent to the Russian border.
A Ukrainian military spokesman, Andriy Lysenko, contradicted the rebel assertions. He said three Ukrainian servicemen had been killed over the past 24 hours. Ukrainian security forces had spotted Russian drones and a helicopter crossing illegally into Ukraine's airspace, Lysenko told a news briefing.
He denied Kiev's forces were firing artillery on Donetsk, one of two rebel strongholds in the east, where a Reuters reporter said explosions were audible in the city center on Saturday. The Donetsk city administration said four people were killed in shelling that destroyed homes and set several buildings on fire.
MOMENTUM WITH THE ARMY
The momentum on the ground is with the Ukrainian forces, who have pushed the separatists out of large swathes of territory and nearly encircled them in Donetsk and Luhansk. Kiev says it now controls the road linking the two cities.
Russia says the Ukrainian offensive is causing a humanitarian catastrophe for the civilian population in the two cities. It accuses Kiev's forces of indiscriminately using heavy weapons in residential areas, an allegation Ukraine denies.
In the past week, three senior rebel leaders have been removed from their posts, pointing to mounting disagreement over how to turn the tide of the fighting back in their favor.
Lysenko, the Ukrainian military spokesman, said he had reports of rebel fighters abandoning their posts in Luhansk, and preparing to leave Donetsk and seek safe haven in Russia.
"A mood of panic is spreading and rebels are trying to leave through the small gaps that remain," he said.
In Donetsk, the red, blue and black flag of separatists was flying on a pole in front of the headquarters. Ten people armed with Kalashnikov rifles were standing on guard outside the main entrance in mismatched camouflage.
"Why should we flee? People are still coming and filling our ranks. Those who have lost their houses to Ukrainian shelling, what else would they do but fight back?," said a fighter who gave his name as Communist.
(Additional reporting by Natalia Zinets and Alessandra Prentice in Kiev and Jason Bush in Moscow; writing by Christian Lowe and Dmitry Zhdannikov; editing by Mark Trevelyan)