Ukraine says its forces are closing in on the main rebel-held bastion of Donetsk and urged the insurgents to let civilians flee besieged eastern cities as fears of a humanitarian crisis grow.
The military advances against pro-Moscow separatists came as more remains from the downed MH17 plane were flown to the Netherlands for identification, and Malaysian experts joined the Dutch and Australian probe at the site of the July 17 crash.
"Yesterday, forces from the Ukrainian anti-terrorist operation occupied the city of Yasinuvata, 19 kilometres north of Donetsk, which is an important railway hub," Ukrainian security spokesman Andriy Lysenko told journalists on Monday.
"The seizure of the town allowed for the encirclement of Donetsk from the north and the closing down of an important channel for the supply of weapons and technology to the terrorists."
He hinted that preparations for an offensive on the city were under way, but gave no more details.
Government forces have made major gains in the east over the past month, and have said they are close to cutting off fighters in Donetsk from the Russian border and their comrades in Lugansk, the insurgents' second largest stronghold.
Ukrainian troops continued to come under fire, however, with Lysenko saying five soldiers had been killed and 14 more injured in recent days.
Kiev also reported it was negotiating the return of about 300 troops who were forced to retreat into Russia after hours of missile and mortar bombardment from across the border.
Russia's security service said border guards had allowed the Ukrainians to cross after they agreed to give up their weapons.
More than three months of civil war have already claimed over 1150 lives.
And Ukraine's Defence Minister Valeriy Geletey admitted in a BBC interview on Sunday "it would not be easy to liberate" Donetsk and Lugansk, where rebels have pledged to fight to the death.
As fighting raged on, Kiev urged separatist rebels in Donetsk, Lugansk and another frontline city, Gorlivka, to agree to "humanitarian corridors" for several hours each day to allow civilians to flee the besieged cities.
Civilians have borne the brunt of the conflict, with both government and pro-Moscow rebel forces accused of firing on built-up areas, resulting in more than 10 civilian deaths at the weekend.
The mayor of Lugansk has warned that the city of 420,000 is on the brink of a "humanitarian catastrophe" after days without power or running water.
More than 100,000 people have fled for other parts of Ukraine since the fighting erupted in April, according to the United Nations, while Russia claims another half a million have crossed its border in search of refuge.
The exodus continued on Monday, with terrified residents waiting at Donetsk train station surrounded by piles of baggage.
"Our house burnt down and our neighbour's too. The whole street was bombed. We are going to Moscow, to my daughter's place," said Yury Ivanovich, who was travelling with family members and neighbours.
Meanwhile, Malaysian experts joined the international probe into the July 17 crash of flight MH17 that killed all 298 people on board, although the 100-strong team was briefly prevented from accessing the rebel-held site.
A plane carrying more remains of victims as well as DNA and belongings also flew back to the Netherlands for the painstaking identification process.
But the search for more remains - strewn across some 20 square kilometres - continues amid the unrest and under the baking summer sun.
Shooting could still be heard as the expert team arrived and were briefly prevented from accessing the rebel-held site.
"Today's situation illustrates once more that this mission is conducted in a contested area, where parties involved are still fighting. Access to the crash site is never 100 per cent guaranteed," the head of the Dutch police mission in Ukraine, Pieter-Jaap Aalbersberg said.
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