Rebels announced hours after it came into effect that they had no intention of observing the cease-fire at the town of Debaltseve, where they have been advancing since January and now have a Ukrainian unit all but encircled.
Washington has said the rebel operation around the town, which sits on a strategic railway hub, is being assisted by the Russian armed forces, which Moscow denies.
Reuters reporters near the front said Debaltseve was being relentlessly bombarded with artillery. At least six tanks as well as armored personnel carriers and artillery could be seen in woods near Vuhlehirsk, six miles west of Debaltseve, which the rebels captured a week ago.
Military trucks headed along the main road in the direction of the town, to the sounds of regular bursts of shelling and the firing of Grad rockets and machine guns.
"You can hear there is no cease-fire," said a rebel fighter with a black ski mask who gave his name as Scorpion, his nom de guerre, and blamed the fighting on Kiev's forces. "Debaltseve is our land. And we will take Debaltseve."
Kiev said its forces were shelled more than 100 times after the truce took effect. Military spokesman Andriy Lysenko said government troops could not pull back their own heavy weapons, as set out in the agreement reached in the Belarussian capital Minsk, without a cease-fire that held.
"The pre-condition for withdrawal of heavy weapons is fulfilling Point One of the Minsk agreements — the cease-fire. One hundred and twelve attacks are not an indicator of a cease-fire. At the moment we are not ready to withdraw heavy weapons," Lysenko said at a news briefing in Kiev.
The military in Kiev said five of its soldiers had been killed and 25 wounded since the cease-fire took effect the previous day.
In Berlin, German Chancellor Angela Merkel's spokesman, Steffen Seibert, said it was important that the withdrawal of heavy weapons begins as scheduled on Tuesday. Merkel was the driving force behind intensive diplomacy to end the war last week, flying to Kiev, Moscow and Washington before staying up all night for the talks in Minsk that produced Thursday's deal.
The West says Putin, who has called eastern Ukraine "New Russia," has sent troops and weapons to back the rebels. Moscow denies this, and accuses the West of waging a proxy war in Ukraine to seek "regime change" in Russia.
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