Ukraine continued to press military operations against pro-Russian separatists, a day after at least 40 people died in clashes and battles in the bloodiest day so far of the crisis.

Ukrainian troops moved towards the rebel-held town of Kramatorsk on Saturday, with the government vowing it would not stop its operations to dislodge separatists. Russian media cited hospital sources as saying fighting overnight had killed one person wounded nine others.

The interior minister, Arsen Avakov, said troops had seized control of rebel-held areas in Kramatorsk but gave no information on possible casualties.

"The active phase of the operation continued at dawn," Avakov wrote on his Facebook page. "We are not stopping."

"Overnight, forces participating in the anti-terrorist operation in Kramatorsk took control of the TV tower that was previously held by the terrorists," added the minister.

Kramatorsk is near the rebel stronghold of Sloyansk, where rebels shot down two Ukrainian attack helicopters on Friday, killing two airmen and capturing a third.

That toll, however, was eclipsed by the deaths of dozens of people in a fire and street-fighting between pro and anti-Russian groups in Odessa, on Ukraine's Black Sea coast.

Regional police in Odessa put the death toll at 37, most of whom were killed when the trade union building in the city was set on fire. It said 200 people had been wounded. Local authorities had previously said 43 people had died.

The violence broke out on Friday afternoon, when the two sides confronted each other, to outnumbered police who were unable to control crowds throwing stones, bottles and stun grenades.

Later on Friday, a fire was started by unidentified men in the government building where separatists were sheltering.

Up to 130 people were arrested on Saturday for their part in the violence, police said.

In Slovyansk, pro-Russian separatists released European military observers who were captured a week ago, Russia's RIA news agency quoted a Russian envoy as saying.

"They have freed all ... who were on my list," Vladimir Lukin was quoted as saying.

The seven observers, including five of their Ukrainian assistants, were held for more than a week in the town.



Vyacheslav Ponomarev, leader of the pro-Russian separatists in eastern Ukraine, confirmed the release of the observers.

Meanwhile the US president Barack Obama and German chancellor Angela Merkel warned Russia it would face additional sanctions if Moscow disrupted Ukraine's plan to hold elections on May 25.

Russia has an estimated 40,000 troops on the Ukrainian border and Kiev has reintroduced conscription and put its armed force on full combat alert, fearing an imminent invasion.