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US Secretary of State John Kerry has urged Russian President Vladimir Putin to publicly call on separatists in Ukraine to lay down their arms.

He said Russia would face “greater costs” unless it took action to show that it supported peace in Ukraine.

Earlier, German Chancellor Angela Merkel warned Russia of new sanctions after fresh clashes in eastern Ukraine.

Ukraine’s president has said continued violations might end a truce between the government and pro-Russian rebels.

Chancellor Merkel and French President Francois Hollande spoke to Mr Putin and Ukrainian President Petro Poroshenko for an hour on Wednesday, officials said.

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Pro-Russian separatists in eastern Ukraine have seized a bus carrying international military observers, Ukraine’s interior ministry says.

Negotiations were under way to secure the release of the observers, seized near the town of Sloviansk, it added.

Western leaders earlier announced they were debating fresh sanctions against Russia over its alleged failure to help de-escalate the crisis in Ukraine.

Russia has accused the West of wanting to “seize” Ukraine.

Moscow has tens of thousands of troops stationed along its side of the border with Ukraine and pro-Russian separatists have been occupying key buildings in a dozen eastern towns, defying the central government in Kiev.

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Pro-Russian protesters who seized the regional government building in the Ukrainian city of Donetsk are reported to have declared a “people’s republic”.

The rebels have called for a referendum on secession from Ukraine by 11 May.

Ukrainian security officials are being sent to the eastern cities of Donetsk, Luhansk and Kharkiv after pro-Russia groups occupied government buildings.

Interim President Oleksandr Turchynov called the unrest an attempt by Russia to “dismember” Ukraine.

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