SLAVIANSK Ukraine (Reuters) - Pro-Russian rebels shot down two Ukrainian helicopters on Friday, killing two crew, as troops tightened their siege of separatist-held Slaviansk and Moscow accused Kiev of launching a "criminal" assault that wrecked hopes of peace.
Though Ukrainian forces appeared to be carrying out one of their most concerted military operations yet, their advance on the ground was limited. Nevertheless, President Vladimir Putin's spokesman accused Kiev of firing on civilians from the air in a "punitive operation" that destroyed an international peace plan.
Russia was "extremely worried" about the fate of Russians in the city, including an envoy sent to help free German and other foreign hostages, the Kremlin spokesman said.
The dramatic language seems to raise the stakes, as Moscow has tens of thousands of troops massed on the border and claims the right to invade if needed to protect Russian speakers.
Reuters journalists in Slaviansk, the most heavily fortified bastion of pro-Russian separatists in eastern Ukraine, heard shooting break out and saw one helicopter opening fire before dawn. Ten hours later, the city was largely quiet, with shops shut and armed separatists in control of the streets.Advancing Ukrainian forces in armored vehicles took up positions closer in to the suburbs, but rebels still controlled most of the city of 130,000.
The separatist pro-Russian militants also made more moves on Thursday, seizing a rail control center for the Donetsk region, a railway official said. By cutting off power, they had all but paralyzed train traffic.
Kiev said the firing of missiles that brought down its helicopters was evidence that Russian forces were present in the town. Moscow denies that its troops are on the ground.
Nonetheless, Kremlin accounts of grave threats to civilians highlight the risk of a Russian move to seize territory ahead of a vote the rebels aim to hold on May 11 seeking a mandate to break with Kiev, like one held in the Crimea region before Moscow annexed it in March.
For Russians, the Kremlin's rhetoric of "fascists" in Kiev launching a "punitive operation" evokes the depredations of Nazi German invaders in World War Two, being given extensive state media coverage as next week's anniversary of the Soviet victory is used to foster national pride and nostalgia.
SOUND OF CANNON
On the square outside city hall in Slaviansk, about 100 people gathered on Friday and said they were appealing to Putin to send troops to help them.
Businesswoman Tamara Voshchanaya said: "What can you think when the sound of cannon makes you jump out of bed, when helicopters are flying over and shooting at our guys?
"We are ready to stand firm, we will not abandon the guys. Give us weapons, and we too will go against the Right Sector," she said, referring to a Ukrainian nationalist group, which Moscow says is menacing Russian speakers across Ukraine.
On the town's southern outskirts, eight Ukrainian armored personnel carriers cut off the road but faced a cordon two deep of local residents shouting at them to go home.
Some rebels threw up new barricades of felled trees.
Putin's popularity has soared with the seizure of Crimea and talk of restoring Moscow's former empire. This week he restored the Soviet-era tradition of holding a May Day parade on Red Square, where marchers carried banners hailing the acquisition of Ukrainian territory.
The European Union said it was watching events in eastern Ukraine with growing concern. But Kiev is not a member of NATO and Western leaders have made clear they will not fight to defend Ukraine.
The Ukrainian Defense Ministry said in a statement that two Mi-24 attack helicopters had been shot down by shoulder-launched anti-aircraft missiles while on patrol overnight around Slaviansk. Two airmen were killed and others wounded.
The aircraft normally has two crew but can carry more.
Other Ukrainian officials and the separatist leader in Slaviansk said earlier that one airman was taken prisoner.
A third helicopter, an Mi-8 transport aircraft, was also hit and a serviceman wounded, the Defense Ministry said. The SBU security service said this helicopter was carrying medics.
Ukrainian officials said their troops overran rebel checkpoints and Slaviansk was now "tightly encircled".
Putin's spokesman heaped blame on the Ukrainian government, which took power two months ago after pro-Western protests forced the Kremlin-backed elected president to flee to Russia.
Noting that Putin had warned before that any "punitive operation" would be a "criminal act", Dmitry Peskov told Russian news agencies that this was what had now happened at Slaviansk.
Peskov said Putin had sent an envoy, Vladimir Lukin, to southeast Ukraine to negotiate the release of European military observers held by the rebels, and that Lukin had not been heard from since the Ukrainian operation began.
"While Russia is making efforts to de-escalate and settle the conflict, the Kiev regime has turned to firing on civilian towns with military aircraft and has begun a punitive operation, effectively destroying the last hope of survival for the Geneva accord," he said, referring to a deal on April 17 signed by Russia, Ukraine, the United States and the European Union.
Under that agreement, separatists were supposed to lay down their arms and vacate the public buildings they have seized in about a dozen towns they have seized across the Russian-speaking east. Since then, however, they have tightened their grip.
Ukraine's Interior Ministry said it persuaded separatists to leave two buildings in the city of Luhansk on Friday.
The SBU said the deadly use by the separatists of shoulder-launched anti-aircraft missiles was evidence that "trained, highly qualified foreign military specialists" were operating in the area "and not local civilians, as the Russian government says, armed only with guns taken from hunting stores".
On his Facebook page, Interior Minister Arsen Avakov posted: "The goal of our anti-terrorist operation and, at the same time, our demands to the terrorists are simple:
"Free the hostages, lay down weapons, vacate administrative buildings and get municipal infrastructure back to normal."
He urged local people to stay indoors and said Ukrainian forces, from the Interior Ministry, National Guard and the armed forces, had orders not to fire on residential buildings.
The rebels said they had the upper hand.
"They wanted to carry out some small-scale tactical operations just to scare the people," said a militant manning a checkpoint leading to the army-held airfield.
"But so far things have not worked out the way they wanted."
(Additional reporting by Natalia Zinets and Elizabeth Piper in Kiev; Writing by Alastair Macdonald; Editing by Peter Graff)