Ukraine conflict: Army claims strategic town in Donetsk

BBC NEWS

The Ukrainian army says it has seized a key town near the rebel stronghold of Donetsk, as fighting rages in the east.

Pro-Russia separatists were driven out of Avdiivka on Wednesday, the army said. The strategic town is near the airport and train station in Donetsk.

Heavy fighting around Donetsk has again prevented international experts from reaching the crash site of flight MH17.

Meanwhile, Russia said new sanctions were "destructive and short-sighted" and would lead to higher energy prices.

Almost two weeks after the Malaysia Airlines jet came down, international monitors were turned back to the city of Donetsk by separatist amid clashes in the area.

Some critics say it is not in the interest of the Ukrainian army for observers to get to the site as it would restrict their offensive, says the BBC's Tom Burridge in Kharkiv.

An international team of observers has struggled to access the MH17 crash site due to heavy fighting

There has been heavy shelling in Donetsk region as Ukraine's army continues its advance against rebels

Russia's economy is suffering as sanctions take effect and borrowers are facing rising interest rates

Regional officials in Donetsk said on Wednesday that 19 people had been killed in fighting in the past 24 hours.

Ukraine says its troops have also entered the towns of Shakhtarsk and Torez in Donetsk region, and Lutuhyne in Luhansk region.

On Tuesday, the US announced new economic sanctions against Russia, widening their scope to include three key sectors of the economy - energy, arms and finance.

US nationals and people living in America will no longer be able to bank with three Russian banks - the VTB, the Bank of Moscow and the Russian Agriculture Bank (Rosselkhozbank).

Peace 'more important'

The EU is also expanding its sanctions, targeting the oil sector, defence equipment and sensitive technologies.

Details of new EU sanctions are now due to be revealed on Thursday, a day later than expected.

Sanctions are starting to bite in Russia, with the rouble down and borrowers squeezed by rising interest rates, says the BBC's Daniel Sandford in Moscow.

Stocks at Russia's second largest bank, VTB, tumbled after the new sanctions were announced

A senior US state department official told the BBC that Russia's central bank had been forced to spend tens of billions of dollars in order to defend the rouble.

"If Russia continues on this current path, the costs on Russia will continue to grow," US President Barack Obama said on Tuesday.

Russia's foreign ministry said the new US sanctions were "destructive and short-sighted" and would aggravate relations between the two countries.

It also attacked fresh EU sanctions as "thoughtless and irresponsible" and said they would "inevitably" lead to higher energy prices in Europe.

Russia retaliates

The first sign of retaliation came after Russia announced a ban on most fruit and vegetable imports from Poland.

Russia buys more than 2bn euros (£1.6bn; $2.7bn) worth of EU fruit and vegetables a year, making it by far the biggest export market for the products.

Polish fruit growers said the ban was political but Russia said the move was for sanitary reasons.

Meanwhile, Germany's Economy Minister Sigmar Gabriel said the sanctions could hurt the German economy, which has strong trade links with Russia.

"Nonetheless at a time of war and peace, economic policy is not the main consideration," he told journalists.

Flowers pile up at Amsterdam's Schiphol airport, the starting point of the ill-fated Malaysia Airlines flight

The list of 87 targets of EU sanctions now includes the heads of Russia's intelligence agencies, the president of Chechnya, and two Crimean energy firms.

However, UK company BP, which owns nearly 20% of Russian state oil giant Rosneft, said further sanctions could "adversely impact" its performance.

Russia has come under increased pressure to end its support for the rebels, who Western governments believe were behind the downing of MH17, killing 298 people.

Moscow has also been accused by the US and EU of supplying heavy weapons to the rebels - a charge it denies.

Russian press reacts to sanctions

• "The Russian authorities have been responding chaotically to emerging threats by taking instant ad hoc measures, but failing to calculate their systemic consequences" - Nezavisimaya Gazeta
• "Sources in Russian diplomatic circles say the Russian leadership hopes that the sectoral sanctions will be considerably less stringent when approved at the top level" - Kommersant
• "It is possible to say now that the Russian authorities mistakenly believed that Europeans would not risk introducing sectoral sanctions for fear that they might backfire" - Novyye Izvestiya
• "Russia is different not only because its economy is much more integrated into the world one. Russia is a nuclear power and a member of the World Trade Organization, which limits the possibility of pressure" - Vedomosti