Ukraine's security services have said the country is fighting a war against separatists in the east of the country, and blamed agents in the breakaway Moldovan region for provoking deadly rioting in the southern town of Odessa.

Vasyl Krutov, the head of Ukraine's the "anti-terrorist centre", said on Saturday that clases in the east against pro-Russian rebels "were not just some kind of short-lived uprising, it is in fact a war".

A spokeswoman for the SBU also blamed rioting in Odessa on Friday, in which 40 people were killed, on "foreign interference" from agents in the autonomous, pro-Russian Moldovan region of Transnistria.

She said former top officials, once part of the former president, Viktor Yanukovich, had financed "saboteurs" to foment the unrest, blaming Serhiy Arbuzov and Oleksander Klymenko, who were now "hiding in a neighbouring country".

Ukraine forces continued to press their offensive in the east, taking control of areas around the town of Kramatorsk. "We are not stopping," said the interior minister, Arsen Avakov.

A spokesman for the Russian president, Vladimir Putin, spokesman countered that both the Ukrainian authorities and their backers in the West were directly responsible for bloodshed in Odessa

"Kiev and its Western sponsors are practically provoking the bloodshed and bear direct responsibility for it," RIA Novosti quoted Dmitry Peskov as saying on Saturday.

Dozens of people died in a fire and others were shot in fighting between pro- and anti-Russian groups on the streets of the Black Sea port on Friday.

In the east, Ukrainian forces launched an operation, condemned by Russia as "punitive", to dislodge separatists from the town of Slovyansk.

Asked how Russia will respond, Peskov said that he was unable to say what actions Russia would take.

"I cannot answer this question, this element is absolutely new to us," he said in comments quoted by Interfax.

Peskov said the violence made the Kiev authorities' plan to hold a presidential election on May 25 "absurd".

"It is obvious that in conditions of military action, a punitive operation and mass killings, it is, at the very least,

absurd to talk about elections," RIA Novosti quoted him as saying.

Kiev accuses Moscow of backing pro-Russian groups in eastern Ukraine. Moscow denies invovlement with the rebels.

"Russia, or anyone else, or even any country, haseffectively lost influence over these people because it will beimpossible to persuade them to disarm against the background of a direct threat to their lives," Peskov was quoted as saying.

He called for dialogue with European partners to help resolve the crisis.

"We understand that without dialogue with our European partners a resolution is practically impossible. But we cannot seek dialogue alone," Peskov said.

Meanwhile, 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.

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.