A top European Union official said Saturday that the 28-nation bloc is set to decide new sanctions against Russia as Ukraine's president warned the conflict with Moscow threatens peace and stability for Europe as a whole.
Ukraine's Petro Poroshenko said a strong EU response is needed because his country is subject to "military aggression and terror" with thousands of Russian troops and hundreds of tanks in eastern Ukraine.
EU Commission President Jose Manuel Barroso said before an EU leaders' summit in Brussels that "sanctions are not and end in themselves" but a means to dissuade Russia from further destabilizing Ukraine.
Russia denies any military involvement in the fighting that has so far claimed 2,600 lives, according to U.N. figures.
The United States and the EU have already imposed sanctions against Russian officials, several companies and the country's financial industry.
Ukraine has lost ground in recent fighting, and said Saturday that it was abandoning a city where its forces have been surrounded by rebels for days. It was also pulling back from another it had claimed to have taken control of two weeks earlier.
The statements by Col. Andriy Lysenko, a spokesman for the national security council, indicate that Ukrainian forces are facing increasingly strong resistance from separatist rebels just weeks after racking up significant gains and forcing rebels out of much of the territory they'd held.
The moves come amid allegations from Kiev and the West that Russia is increasing support for the rebels, including sending in tanks and armored vehicles.
Ukrainian forces had been surrounded by rebels in the town of Ilovaysk, about 15 miles east of the largest rebel-held city of Donetsk for days.
"We are surrendering this city," Lysenko told reporters. "Our task now is to evacuate our military with the least possible losses in order to regroup."
Lysenko said that regular units of the military had been ordered to retreat from Novosvitlisvsk and Khryashchuvate, two towns on the main road between the Russian border and Luhansk, the second-largest rebel-held city. Ukraine had claimed control of Novosvitlivsk ealier in August.