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Updated: Fri, 29 Aug 2014 07:46:19 GMT | By The Associated Press, cbc.ca

Ukraine crisis: Rebels agree to give Ukrainian troops safe passage



Servicemen sit atop an armoured vehicle as they travel through the steppe near the village of Krasnodarovka in Rostov region August 28, 2014. A Reuters reporter saw on Thursday a column of armoured vehicles and dust-covered troops, one of them with an injured face, driving through the Russian steppe just across the border from a part of Ukraine which Kiev says is occupied by Russian troops. None of the men or vehicles had standard military identification marks, but the reporter saw a Mi-8 helicopter with a red star insignia -- consistent with Russian military markings -- land next to a nearby military first aid tent. The column was driving east away from the Ukrainian border across open countryside near the village of Krasnodarovka in Russia's Rostov region. REUTERS/Maria Tsvetkova (© RUSSIA - Tags: MILITARY POLITICS CONFLICT TPX IMAGES OF THE DAY)

Servicemen sit atop an armoured vehicle as they travel through the steppe near the village of Krasnodarovka in Rostov region August 28, 2014. A Reuters reporter saw on Thursday a column of armoured vehicles and dust-covered troops, one of them with an injured face, driving through the Russian steppe just across the border from a part of Ukraine which Kiev says is occupied by Russian troops. None of the men or vehicles had standard military identification marks, but the reporter saw a Mi-8 helicopter with a red star insignia -- consistent with Russian military markings -- land next to a nearby military first aid tent. The column was driving east away from the Ukrainian border across open countryside near the village of Krasnodarovka in Russia's Rostov region. REUTERS/Maria Tsvetkova (RUSSIA - Tags: MILITARY POLITICS CONFLICT TPX IMAGES OF THE DAY) - RTR445PB Maria Tsvetkova/Reuters

NATO said at least 1,000 Russian troops are in Ukraine and later released what it said were satellite photos of Russian self-propelled artillery units moving last week.

For the second day, Russian markets reacted nervously to the growing escalation of the conflict in Ukraine with the Russian ruble diving to the all-time low of 37.10 rubles against the U.S. dollar in early morning trading.

Markets dropped on Thursday on reports of Russia's apparent invasion in Ukraine, sparking investors' fears of further economic sanctions directed at Moscow. The ruble lost 1.4 per cent against the dollar and the MICEX benchmark shed 1.6 per cent.

"I'm calling on insurgents to open a humanitarian corridor for Ukrainian troops who were surrounded in order to avoid senseless deaths," Putin said in the statement published on the Kremlin's website in the early hours on Friday.

Ukrainian troops must lay down arms, rebels say

Putin did not address the claims about Russia's military presence in Ukraine. Instead, he lauded the pro-Russian separatists whom he described as "insurgents" for "undermining Kyiv's military operation which threatened lives of the residents of Donbass and has already led to a colossal death toll among civilians."

Putin's statement could be referring to Ukrainian troops who have been trapped outside the strategic town of Ilovaysk, east of Donetsk, for nearly a week now. Protesters rallied outside the Ukrainian General Staff on Thursday, demanding reinforcements and heavy weaponry for the troops outside Ilovaysk, most of whom are volunteers.

A top rebel leader in the rebel stronghold of Donetsk promptly reacted to Putin's appeal but said the Ukrainian troops would have to lay down the arms before they were allowed to go.

"With all our respect to Vladimir Vladimirovich Putin, the president of a country which gives us moral support, we are ready to open humanitarian corridors to the Ukrainian troops who were surrounded with the condition that they surrender heavy weaponry and ammunition so that this weaponry and ammunition will not be used against us in future," Alexander Zakharchenko said on Russia's state Rossiya 24 television.

Two columns of tanks and other equipment entered southeastern Ukraine at midday on Thursday, following heavy shelling of the area from Russia that forced overmatched Ukrainian border guards to flee, according to Col. Andriy Lysenko, a spokesman for Ukraine's national security council.

More economic sanctions considered

European Union foreign ministers on Friday were set to weigh adopting a tougher stance on the Ukraine crisis amid increasing calls to beef up economic sanctions against Russia.

The United States and the EU have imposed sanctions against dozens of Russian officials, several firms and the country's financial industry. Moscow has retaliated by banning food imports. U.S. President Barack Obama said Thursday Russia's support for rebel combatants in eastern Ukraine must incur "more costs and consequences." Obama ruled out a military confrontation between the U.S. and Russia.

However, the EU ministers weren't expected to make a decision on new sanctions. Instead, their discussions were set to prepare possible further steps that could be announced at a summit of the bloc's 28 leaders Saturday.

In what appeared to be a last-minute bid for more support and tougher action on Russia, Ukrainian President Petro Poroshenko is set to meet the head of the EU's executive Commission, President Jose Manuel Barroso, and summit chairman Herman Van Rompuy in Brussels Saturday a few hours before the summit.

New EU sanctions against Russia would have to be agreed unanimously — a requirement that has in the past blocked tougher action as some nations fear the economic fallout of sanctions. Russia is the EU's third-largest trading partner and one of its biggest oil and gas suppliers.

The fighting between Ukrainian military forces and Russian-backed separatists in eastern Ukraine has already claimed at least 2,200 lives, according to UN figures.

The two-day foreign ministers' meeting was also set to feature discussion about the situation in Gaza and the crises engulfing Syria and Iraq.

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