United States said it plans to deploy 600 troops to Poland and the Baltic states to "reassure our allies and partners" after threatening Russia with more sanctions.
Ukraine's acting president Oleksandr Turchynov on Tuesday ordered a new "anti-terrorist" operation against separatists holding a string of eastern towns after the discovery of two "brutally tortured" bodies.
One of the dead was a local politician from Turchynov's party who was kidnapped nearly a week ago, the leader said, blaming his death on the rebels.
Kiev's offensive threatens to sound the final death knell for an already tattered agreement struck last week in Geneva between Ukraine, Russia and the West to ease the crisis.
"Security agencies are working to liquidate all the groups currently operating in Kramatorsk, Slavyansk and the other towns in the Donetsk and Lugansk regions," said Deputy Prime Minister Vitaly Yarema, according to the Interfax Ukraine news agency.
In the eastern town of Slavyansk, where the two bodies were found, the streets were calm, with locals walking about as usual. A handful of rebels wearing camouflage gear and ski masks but with no apparent weapons stood outside the barricaded town hall they are occupying.
In front of the building were displayed three photos of militants who were killed in a weekend attack on a roadblock the separatists have blamed on pro-Kiev ultra-nationalists.
Tuesday, a Ukrainian reconnaissance plane was hit by small-arms fire from the town, but the aircraft landed safely with none of its crew hurt.
Pro-Moscow insurgents in Slavyansk are holding two journalists, an American working for the company Vice News, Simon Ostrovksy, and a Ukrainian working for a pro-Kiev outlet, Irma Krat.
Slavyank's local rebel leader Vyatcheslav Ponomarev told reporters that the American "is not being detained, was not abducted, has not been arrested" and claimed he was "working" in one of the rebel-occupied buildings.
However the Twitter feed of the normally prolific journalist has been inactive for a day.
US Secretary of State John Kerry, in an overnight call to Russian Foreign Minister Sergei Lavrov, "expressed deep concern over the lack of positive Russian steps to de-escalate, cited mounting evidence that separatists continue to increase the number of buildings under occupation and take journalists and other civilians captive," a senior State Department official said.


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