Russian President Vladimir Putin made a bellicose statement to the European Commission President, telling him that his armed forces could 'take Kiev in a fortnight'.

The warning was made to Jose Manual Barroso over the phone, according to an Italian newspaper and came as Ukraine lost control of a key airport in the east of the country.

Mr Barroso relayed what the Russian leader said to a European council meeting at the weekend in Brussels.

Warning: Mr Putin (right) made a bellicose statement to the European Commission President, Jose Manual Barroso (left), telling him that his armed forces could 'take Kiev in a fortnight'. The pair are pictured here on August 20

Putin listens to an explanation during a visit to the Mammoth Museum of the North-Eastern State University in Yakutsk, Russia

Denial: Mr Putin insists that Russian troops are not involved in fighting in eastern Ukraine

People loosen parts from a burned-out Ukrainian armored personnel carrier in the village of Hrabske, eastern Ukraine

The wreckage of an armoured personel carrier is seen at an abandoned checkpoint in Olenivka, 12 miles south of Donetsk

Ukrainian soldiers patrol in an APC in the Donetsk area. Ukrainian troops have retreated from the Lugansk airport and a nearby village in the east after coming under artillery fire

He told the assembled leaders from 28 European nations that when he asked Mr Putin about Russian soldiers being on the ground in Ukraine, he issued a stark threat.

Mr Barroso told the meeting that Putin said: 'This is not the problem, but that, if I want to, I can take Kiev in two weeks,’ according to La Repubblica.

Earlier in the meeting German Chancellor Angela Merkel said that 'there are no limits to the unpredictability of Putin', the paper reported.

David Cameron, in grave tones, warned the heads of state that Putin must not be permitted to take the whole country ‘or we risk repeating the errors of 1938 in Munich’.

‘We don’t know what he could do next,’ he added.

Military spokesman Andriy Lysenko said Ukrainian forces had pulled back from the airport near Luhansk.

However, they had destroyed seven Russian tanks and identified a major build-up of Russian forces to the north and south of the city.

'According to our operational data, there are no fewer than four (Russian) battalion-tactical groups in Ukraine,' he told reporters, adding that each one comprised 400 men.

Earlier, Russia faced claims from Ukraine that the rebels it backs had fired on a naval vessel with artillery.

Two seamen are missing after the attack, which came as the Kremlin increased pressure for an immediate ceasefire, at the same time as calling for rebel-held areas to become a separate state.

Russia Foreign Minister Sergei Lavrov said negotiations taking place on Monday should seek an immediate ceasefire in eastern Ukraine. Pictured are pro-Russian rebels preparing arms for an assault on Ukrainian army positions in Donetsk airport

A Pro-Russian rebel armed with a heavy machine gun prepares to attack Ukrainian troops at Donetsk airport

Russian President Vladimir Putin, center right, poses for a photo with athletes while attending the Judo World Cup in the city of Chelyabinsk in Siberia, Russia, on Sunday. Analysts said Putin wants to establish a 'frozen conflict' to consolidate his gains in Ukraine

A man shoots at targets depicting a portrait of Russian President Vladimir Putin in a shooting range in Lviv

Figure of hate: A target depicting a portrait of Putin that's riddled with bullet holes

Ending hostilities now would consolidate gains for pro-Moscow forces, which the Kiev government say are simply a front for Vladimir Putin.

Russia Foreign Minister Sergei Lavrov said Ukrainian forces must pull back from positions from which they can hit civilian targets, and negotiations taking place on Monday should seek an immediate ceasefire in eastern Ukraine.

'They must leave positions from which they can harm the civilian population,' Lavrov told students in Moscow. 'I very much count on today's negotiations being devoted above all to the task of agreeing an immediate ceasefire, without conditions.'

He also said that from Russia 'there will be no military intervention (in Ukraine), we are for an exclusively peaceful resolution of that most serious crisis, that tragedy'.

Russia Today filmed the BBC's John Sweeney confronting Mr Putin directly about the crisis. He asked him if he regretted the deaths in Ukraine.

Mr Putin said: 'The current government in Ukraine does not want to conduct political negotiations with the eastern regions of the country. Political and essential negotiations.

'What was the purpose of the military actions in the east of the country? What provoked the reactions in the eastern regions?

'The Ukrainian military encircled the big cities and villages. They were shelling houses directly. The purpose of people in eastern regions is to take them away from the villages and stop them shelling the villages. This is what is being neglected in the Western countries.'

Analysts said that Putin wants to establish a 'frozen conflict', which would consolidate his gains in the region, giving him permanent strong influence in Ukraine.

The talks in the Belarussian capital Minsk will bring together representatives of Russia, Ukraine, the OSCE security forum and separatist rebels in eastern Ukraine.

Lavrov's call for a ceasefire came after Ukraine accused rebels of shelling a Navy patrol boat.

Two seamen are missing after Sunday's separatist rebel artillery attack on a patrol boat in the Sea of Azov, and eight seamen were rescued, a Ukrainian border guard official said on Monday.

'The cutter has sunk. We managed to save eight sailors, thanks to other cutters coming to their rescue. Seven of them are injured or burned. Two sailors have gone missing. We are continuing rescue operations,' the official, Serhiy Astakhov, told Reuters.

'After analysing the situation, we believe that this attack was from an artillery system but we don't know yet where it was fired from,' he said.

Conflict: A map showing the military state of play in eastern Ukraine

Analysts said that Putin wants to establish a 'frozen conflict', which would consolidate his gains in the region. Pictured are Ukrainian troops riding in an armoured vehicle in the Donetsk region

Ukrainian President Petro Poroshenko accused Russia on Monday of launching 'direct and open aggression' which he said had radically changed the balance on the battlefield against Kiev in its fight against pro-Russian separatists.

'Direct and open aggression has been launched against Ukraine from a neighbouring state. This has changed the situation in the zone of conflict in a radical way,' he said in a speech at a military academy in Kiev.

Ukrainian troops and local residents were reinforcing the port of Mariupol on Sunday, the next big city in the path of pro-Russian fighters who pushed back government forces along the Azov Sea this past week in an offensive on a new front.

Following events last week in Ukraine there would be high-level personnel changes in the Ukrainian armed forces, Poroshenko said.

Moscow denies the presence of Russian tanks and troops in Ukraine, despite what Nato and Western governments have said is overwhelming evidence to the contrary.

A volunteer helps dig trenches near a block post of the Ukrainian army to defend Mariupol from pro-Russian rebels

Lavrov added that any new sanctions from the European Union or the United States would force Russia to protect its economy, citizens and businesses.

In the case of new sanctions over the Ukraine crisis, he said, 'we will first of all start from our own interests - protect our economy, protect our social sphere, protect our businesses and at the same time draw conclusions from the actions of our partners'.

Lavrov played down Russia's exclusion from the Group of Eight over its annexation of Ukraine's Crimea, saying the forum had lost much of its significance since the formation of the wider G20.

Meanwhile, lights went off temporarily overnight in most cities on the Crimean peninsula, which Russia seized from Ukraine in March, with local leaders accusing Kiev of sabotage.

Ukrainian army servicemen repair an armoured vehicle at their position near Debaltseve, Donetsk region

Some two-thirds of the normal electricity supply from Ukraine went off around 1900GMT, Russian news agency Itar-Tass cited the local electricity distributor as saying, plunging into darkness major cities as Yalta and Sevastopol, the home of the Russian Black Sea Fleet.

Supplies to the peninsula, which is dependent upon Ukraine for 80 per cent of its electricity, were eventually restored, said energy distribution company Crimenergo, but there was no explanation from Ukraine as to the reason for the outage.

But Crimea's acting governor accused Kiev of using electricity as a weapon against the peninsula.

'It is the latest act of sabotage by the Ukrainian authorities, this time aimed at disrupting preparations for the schools' reopening for the beginning of the school year,' Sergei Aksyonov was quoted as saying by RIA-Novosti news agency.

No comment was immediately available from the Ukrainian authorities.

Ukraine says its military is riddled with Russian spies

Concern: Valeriy Heletey says that the Ukrainian army is riddled with Russian spies

With pro-Russian forces making significant gains in Ukraine, Kiev's defence minister has vowed to set up a SMERSH-style counter-intelligence agency to stop Moscow's infiltration weakening his armed forces.

Amid fears that the conflict could descend into full-scale war between the two former Soviet states, Valeriy Heletey claimed that his army is now engaged with Russian servicemen in both Donetsk and Lugansk regions.

The pro-Kremlin forces - which Kiev insists are spearheaded by Vladimir Putin's troops - have now seized control of Lugansk airport and are strengthening around Novoazovsk in Donetsk region, they claim.

The claims come as Nato leaders prepare to meet in Wales for the alliance's toughest summit since the end of the Cold War.

With his army in retreat, defence minister Heletey said he was setting up a new counter-intelligence service based on Stalin's feared SMERSH - 'death to spies' - system established in the Red Army during World War Two.

'Today like never before, it is important to get rid of the Russian 'fifth column' within the Ukrainian Armed Forces and Defence Ministry, and more importantly, in the units and regiments engaged in the Anti-Terrorist Operation,' he said.

The service 'will be somewhat similar to SMERSH and operate mainly on the front-line and in the military command bodies'.

It would 'identify and destroy enemy agents' and 'uncover instances of the non-fulfilment of military orders by commanders as well as instances of desertion'.

Ukrainian servicemen rest near their military equipment inside a military camp in the Donetsk region

The special service will be 'directly subordinated to me', said Heletey, a former policeman appointed by President Petro Poroshenko to crush rebels in the east of Ukraine.

'Russian troops appeared not only in Donetsk but also near Lugansk airport and in other towns,' he told Ukrainian TV, admitting the task facing his army - which is seeking military equipment from the US and EU countries -'has become more difficult'.

This was confirmed by both intelligence and other responsible services, including eyewitnesses who have seen them in Donetsk', he alleged.

'Right now we are already fighting not against the self-proclaimed republics - DPR, DLR [Donetsk and Luhansk people's republics].

'We are fighting against Russia. The Kremlin decides what happens in Donbass, what to do next.'

He warned: 'Everything is decided in the Kremlin. We are holding talks with representatives of the Kremlin.'

He claimed the Russian had plans to 'redraw the map' in the region, including in the unofficial statelet of Transistria, a region of Moldova bordering Ukraine to the west, which is entirely supported by Moscow.

While not acknowledging the presence of Russian troops, a rebel spokesman in Lugansk said:

'We have managed to take the airport under our control. It is a very important strategic point, we have been fighting for it for a long time and now we have taken it.'

Concern was high today over the fate of both Ukrainian forces and their Russian captives amid Kiev claims that separatist forces including Russians opened fire on a convoy of evacuees, breaking an agreement.

Borys Filatov, a senior official in the Dnipropetrovsk regional state administration, said: 'The Russians gave their word to let the people evacuate. However, they started to shoot.'

Sources have put the number of dead at dozens or even hundreds, but there is so far no confirmation.

'Our convoy also had tens of wounded and captured Russian troopers. They also were killed,' said Filatov.

Poroshenko and his military commanders are seeking weapons and intelligence support from the West.

However, Ukraine is not a Nato member, and major Western countries have indicated they will not deploy troops on the ground.

'Do you regret the killings in Ukraine?': Putin answers journalist's questions in unplanned interview

The Russian President blamed Ukrainian forces for the current conflict in Ukraine, accusing them of directly targetting homes in eastern cities and villages.



He said that the purpose of the Russian military operation in the eastern regions was to remove civilians from the conflict-stricken region.

He added that he thought the current conflict was due to the Ukrainian government's failure to conduct negotiations with the eastern regions of the country.



He gave his views during an unplanned interview the the BBC's John Sweeney, who questioned Mr Putin after the Russian leader attended a conference in the Belarus capital Minsk.

Putin initially refused to stop for the journalist, but later spoke to him, saying 'I will answer'.

He also offered his opinion on the hopes for peace in Ukraine during the interview, which took place in a corridor.



Mr Putin said the process of direct negotiations between Kiev and the eastern regions was 'the beginning of a very important process'.