Skirmishes continue in eastern Ukraine but no signs of a widening conflict

Ukrainian forces and pro-Russian separatists fought skirmishes near the Russian border on Saturday but there was no sign of the conflict widening after Kyiv said it partially destroyed an armored column that had crossed the border from Russia.

The report of the attack on the armored column on Friday triggered a sell-off in the US dollar and European stocks, with markets fearful it could change the Ukraine conflict into an open confrontation between Moscow and Western-backed Kyiv.

But Moscow made no threat of retaliation, instead saying it was a "fantasy" that its armored vehicles entered Ukraine, while in Washington the White House said it could not confirm that Russian vehicles had been attacked on Ukrainian soil.

On the ground, the conflict in eastern Ukraine returned on Saturday to the pattern it has been following for several weeks. Kyiv said military equipment was entering from Russia, and the rebels said they had attacked Ukrainian troops.

A Reuters reporter in Donetsk, one of two rebel strongholds in the east, said the sound of explosions was audible in the city center.

The Finnish President, Sauli Niinisto, was to arrive in Kyiv later on Saturday for talks with Ukraine's President Petro Poroshenko aimed at finding a negotiated solution.

Niinisto had met Putin in southern Russia on Friday and afterwards spoke of the possibility of a truce, although it was not immediately clear how that would happen.

Counter-claims

The conflict in Ukraine has dragged relations between Russia and the West to their worst since the Cold War and set off a round of trade restrictions that are hurting struggling economies both in Russia and Europe.

The United Nations said this week that an estimated 2,086 people had died in the Ukraine conflict, with nearly 5,000 wounded.

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.

Rebels said two villages south of Donetsk, the other separatist stronghold, were bombed overnight with mortars. Rebel news outlet Novorossiya also said two neighborhoods of the city itself had been hit with artillery.

A Ukrainian defense ministry spokesman, Andriy Lysenko, contradicted the rebel assertions. He said three Ukrainian servicemen had been killed over the past 24 hours, and denied Kyiv's forces were firing artillery on Donetsk.

In the past few hours Ukrainian security forces had spotted Russian drones and a helicopter crossing illegally into Ukraine's airspace, Lysenko told a news briefing.

He declined to give further details on the incident on Friday in which Kyiv said it attacked armored vehicles that arrived from Russia. Ukraine has not made clear if the vehicles were manned by Russian soldiers or separatist irregulars.