Civilians have been taking refuge in bomb shelters in Donetsk
Ukrainian government forces are poised to take a key town in the east, which would divide the last two major pro-Russian rebel groups, reports say.
A rebel commander was quoted as saying Krasnyi Luch, a town between the two rebel strongholds of Luhansk and Donetsk, had been captured by the army.
Other rebels later said they would be willing to accept a ceasefire.
Some 1,500 people are believed to have died since the conflict began in April, when rebels stormed cities in the east.
The government stepped up operations to retake rebel-held areas following the election of Petro Poroshenko as president in June.
'Completely encircled'
Rebel commander Igor Girkin was quoted by Russian media as saying that Krasnyi Luch had been "captured" after Cossacks defending the town "ran away".
A small detachment of rebels, he said, was still holding out in the town, which connects the city of Donetsk with Ukraine's Luhansk region on the Russian border.
Girkin, who is also known as Strelkov, said his men in the Donetsk region were "completely encircled".
Ukrainian security spokesman Andriy Lysenko said he could not confirm that government forces had taken Krasnyi Luch.
Aleksandr Zakharchenko, the newly installed political leader of the rebels in Donetsk, was later quoted by the AP news agency as saying he would accept a ceasefire.
Ukrainian government forces are poised to take a key town in the east, which would divide the last two major pro-Russian rebel groups, reports say.
A rebel commander was quoted as saying Krasnyi Luch, a town between the two rebel strongholds of Luhansk and Donetsk, had been captured by the army.
Other rebels later said they would be willing to accept a ceasefire.
Some 1,500 people are believed to have died since the conflict began in April, when rebels stormed cities in the east.
The government stepped up operations to retake rebel-held areas following the election of Petro Poroshenko as president in June.
'Completely encircled'
Rebel commander Igor Girkin was quoted by Russian media as saying that Krasnyi Luch had been "captured" after Cossacks defending the town "ran away".
A small detachment of rebels, he said, was still holding out in the town, which connects the city of Donetsk with Ukraine's Luhansk region on the Russian border.
Girkin, who is also known as Strelkov, said his men in the Donetsk region were "completely encircled".
Ukrainian security spokesman Andriy Lysenko said he could not confirm that government forces had taken Krasnyi Luch.
Aleksandr Zakharchenko, the newly installed political leader of the rebels in Donetsk, was later quoted by the AP news agency as saying he would accept a ceasefire.
The Ukrainian military has been closing in on Donetsk city
People in Donetsk have been trying to secure their houses in case the conflict gets too close
Meanwhile, in the city of Luhansk, second only to Donetsk in its importance to the rebels, there are fears of a humanitarian disaster.
The city council reported on its website (in Russian) on Saturday that the city of 425,000 people had been without electricity and power for a week. Mobile phones and land lines were not working, it said.
Parts of the city were still being bombarded and most shops were shut, although bakeries and some chemist's shops remained opened, it added, quoting residents.
Western government accuse Russia or arming the rebels, a claim the government in Moscow denies.
In the latest violence, the Ukrainian government says 13 soldiers were killed on Friday.
A civilian was killed in Donetsk on Saturday when a shell hit a street in the city's Kirovskyy district, the city's official authorities reported. Shells also hit the Petrovskyy district, they added.
In other developments
The Russian navy "expelled" a US submarine from its territorial waters in the Barents Sea on Thursday, a navy source told Russian media
Russia announced it was freeing five Ukrainian officers for "humanitarian reasons", a day after announcing their arrest for suspected war crimes in Ukraine
The authorities in the Ukrainian capital Kiev dismantled protest barriers erected during the winter in the city centre
The UK and US v not to use humanitarian assistance as a pretext for sending troops into the east
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Meanwhile, in the city of Luhansk, second only to Donetsk in its importance to the rebels, there are fears of a humanitarian disaster.
The city council reported on its website (in Russian) on Saturday that the city of 425,000 people had been without electricity and power for a week. Mobile phones and land lines were not working, it said.
Parts of the city were still being bombarded and most shops were shut, although bakeries and some chemist's shops remained opened, it added, quoting residents.
Western government accuse Russia or arming the rebels, a claim the government in Moscow denies.
In the latest violence, the Ukrainian government says 13 soldiers were killed on Friday.
A civilian was killed in Donetsk on Saturday when a shell hit a street in the city's Kirovskyy district, the city's official authorities reported. Shells also hit the Petrovskyy district, they added.
In other developments
The Russian navy "expelled" a US submarine from its territorial waters in the Barents Sea on Thursday, a navy source told Russian media
Russia announced it was freeing five Ukrainian officers for "humanitarian reasons", a day after announcing their arrest for suspected war crimes in Ukraine
The authorities in the Ukrainian capital Kiev dismantled protest barriers erected during the winter in the city centre
The UK and US v not to use humanitarian assistance as a pretext for sending troops into the east
