Ukraine said Russian tanks had flattened a small border town and pro-Russian rebels had made fresh gains in its east, as EU leaders signalled on Saturday they would threaten more sanctions against Moscow over the crisis.

Ukrainian President Petro Poroshenko, attending an EU summit in Brussels, said on Saturday he believed that efforts to halt violence with pro-Russian rebels were very close to a "point of no return" and that failure could lead to "full-scale war".

"I think we are very close to the point of no return. The point of no return is full-scale war, which already happened on the territory controlled by separatists," he told a news conference in Brussels after meeting EU leaders.

He added, however, that a trilateral meeting on Monday involving representatives of Kiev, Moscow and the European Union could produce a ceasefire.