Slavyansk (Ukraine) (AFP) - Ukraine's military suffered heavy casualties in a stepped-up offensive on pro-Russian rebels on Monday, as Europe and the head of the UN made a last-ditch diplomatic effort to reel the country back from the brink of civil war.

At least four Ukrainian servicemen were killed and 30 injured battling heavily armed insurgents around the flashpoint eastern town of Slavyansk as Russia warned the violence was putting peace in Europe in peril.

The interior ministry in Kiev said the pro-Russian gunmen controlling the town were using civilians as human shields and shooting from houses, some of which were ablaze.

"They are waging a war on us, on our own territory... my mission is to eliminate the terrorists," Interior Minister Arsen Avakov told reporters near Slavyansk, from where he was overseeing the assault.

The head of Ukraine's national guard, Stepan Poltorak, said: "We have bottled them (the rebels) up in the centre" of Slavyansk, but added that "our adversaries are well-trained and well-equipped".

Authorities in the regional capital Donetsk said one civilian in Slavyansk was killed and some 15 wounded in the fighting.

The advance on Slavyansk was part of a wider military operation in the east to root out the separatist insurgents, who are holding more than a dozen towns.

The authorities retook control of the TV tower near Slavyansk but lost a helicopter, cut down by machine gun fire. The pilots survived.

Russia, which denies any hand in the violence, warned in a foreign ministry report Monday that the unrest in Ukraine was now "fraught with such destructive consequences for Europe's peace, stability and democratic development that it is absolutely necessary to prevent it".

The report accused Ukrainian "ultra-nationalists" -- who Moscow claims control Kiev's government -- of rights violations on a "mass" scale.

Moscow later warned of an evolving "humanitarian disaster" in eastern Ukraine where it said Kiev was carrying out "terror against its own people."

But Ukraine's interim president declared it was Russian meddling that had brought war to his country. He warned pro-Russian provocateurs might stage violence in Kiev during celebrations on Friday marking the Soviet victory over Nazi Germany in World War II.

"War is in effect being waged against us, and we must be ready to repel this aggression," said Oleksandr Turchynov, who has placed Ukraine's armed forces on combat alert and reintroduced conscription amid fears of a Russian invasion.

There were concerns also for the south of Ukraine, in the port city of Odessa, which was seething after a deadly clashes and a fire on Friday that killed 42 people.

After an angry pro-Russian crowd on Sunday stormed Odessa's police headquarters and forced officers inside to free 67 of their arrested fellow activists, authorities moved the 42 remaining inmates to other parts of Ukraine.

Prime Minister Arseniy Yatsenyuk has pledged a full investigation into Friday's bloodshed that he said was part of a Russian plot "to destroy Ukraine and its statehood".

- Mediation offer -

As diplomats scrambled to dial down the tensions in the worst East-West crisis since the end of the Cold War, UN Secretary General Ban Ki-moon offered himself as a personal go-between.

Speaking exclusively to AFP in Abu Dhabi, Ban offered "to provide my own role if necessary" before the crisis "spins out of control and creates huge consequences beyond anybody's control".

However UN spokesman Farhan Haq later said there was "nothing to announce at this stage" about a possible mediation, which would need to be requested by the parties involved.

Ban's offer came as European leaders, fearing all-out civil war on their eastern flank, launched a desperate new peace bid, urging Ukraine and Russia to find a negotiated solution.

The chairman of the Organisation for Security and Cooperation in Europe, Didier Burkhalter, was due in Moscow on Wednesday amid calls for his group to mediate between Kiev and eastern separatists.

The trip by Burkhalter, who is also the Swiss president, was agreed in a phone call between Russian President Vladimir Putin and German Chancellor Angela Merkel late Sunday.

"Putin and Merkel stressed the importance of effective international action -- especially by the OSCE -- in reducing the tensions in Ukraine," Russia said in a statement.

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