Russian President Vladimir Putin has urged Kyiv to allow Ukrainian soldiers who are encircled in an eastern Ukrainian town to lay down their weapons as Washington warned Moscow that "the costs to Russia will rise" if it keeps supporting the rebels.

Fierce fighting for the strategic town of Debaltseve has continued despite a cease-fire agreement brokered by Germany and France last week.

A Ukrainian defense spokesman, Anatoliy Stelmakh, said "several [army] units were surrounded" in Debaltseve, as fighting for the strategic railway hub continued. Rebels have said Ukrainian forces must lay down their weapons in order to be allowed safe passage.

Putin, speaking on a visit to Hungary on February 17, said the conflict could not be solved by "military means."

Separatists said on February 17 that they seized most of Debaltseve and had surrounded the remaining government troops there. The rebels claim the truce does not apply to the battle front at Debaltseve.

The White House said U.S. Vice President Joe Biden, after talking on the phone with Ukrainian President Petro Proshenko, "strongly condemned the violation of the cease-fire by separatist forces acting in concert with Russian forces, in and around the town of Debaltseve," and warned of increased "costs" to Russia.

Poroshenko, who also talked on the phone with German Chancellor Angela Merkel, said the rebels' assault on Debaltseve was a "cynical attack" on the truce and called for a "tough" international response to "the treacherous actions of the rebels and Russia."

Ukraine's Defense Ministry said some government troops were taken prisoner by separatists in Debaltseve, but denied claims by Russian media that a large number of soldiers were captured.

Putin, speaking at a news conference in Budapest with Hungarian Prime Minister Viktor Orban, said the continued fighting in and around Debaltseve was "predictable" despite the cease-fire agreed last week after marathon talks in Minsk brokered by France and Germany.

He said he was convinced that a "majority of Ukrainian troops" have "no desire" to fight in what he called a "fratricidal war,"

Security Council Statement

Striking what appeared to be an ironic note, Putin said defeat was hard to swallow for the Ukrainian army, since it had lost Debaltseve to what he called "former miners and tractor drivers."

Ukraine and the West have accused Russia of sending troops into Ukraine and playing a direct military role in the conflict -- an accusation Moscow rejects.

Putin also suggested, without naming any specific countries, that the West already is supplying weapons to Ukrainian government forces, but said "the end result will be exactly what it is today. It is inevitable."

Meanwhile, the UN Security Council on February 17 issued a statement urging both sides to "immediately cease hostilities" and abide by the truce brokered last week in Minsk by Germany and France.

The British-drafted statement expressed grave concern at continued fighting in and around Debaltseve.

At a separate public meeting, the 15-member Security Council unanimously adopted a Russian-drafted resolution calling on all sides to respect the cease-fire.

During the meeting, U.S. Ambassador to the United Nations Samantha Power said it was "ironic" that Russia drafted such a resolution given the rebels fighting in eastern Ukraine are backed by Moscow.

The developments come after both sides failed to begin pulling back heavy weapons from the front lines in the second phase of a cease-fire deal that came into effect on February 15.

The withdrawal of tanks, artillery, and rockets was supposed to begin on February 17 under the terms of a cease-fire agreement signed last week in Minsk.

The pull-back was meant to be completed within two weeks, creating a buffer zone stretching along 140 kilometers of frontline territory.

In other parts of eastern Ukraine, the truce had been broadly respected since February 15.

The United Nations said on February 17 that the war in eastern Ukraine has already killed more than 5,600 people and displaced more than 1 million.

Based on reporting by Reuters, AP, and AFP