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Dmitry Lovetsky, Associated Press
A pro-Russian fighter runs past a huge poster during fighting near a regional police department in downtown Donetsk, eastern Ukraine, Tuesday, July 1, 2014. Ukraine renewed its attacks against armed pro-Russian separatists Tuesday after the president called off a unilateral cease-fire, carrying out air and artillery strikes against rebel positions in eastern Ukraine.

DONETSK, Ukraine — Panicked residents looked for a safe place to hide Tuesday as Ukrainian troops and pro-Russia separatists fought an hours-long gunbattle in the center of Donetsk, the largest city in eastern Ukraine. Rebels captured the Interior Ministry headquarters there a day after the president said they weren't serious about peace and ended a cease-fire.

The often-broken cease-fire had given European leaders 10 days to search in vain for a peace deal, and its end raised the prospect of an escalation in a conflict that has already killed more than 400 people. Ukrainian forces have been unable to suppress the rebels in two months of fighting — and it was not clear now what they would be doing differently to change that situation.

President Petro Poroshenko had called a unilateral cease-fire to try to persuade the rebels to lay down their weapons and hold peace talks. Some of the rebels later signed onto the cease-fire as talks began. But each side accused the other of repeated violations.

In Donetsk, many streets were deserted and rifle fire rang out as rebels attacked the Interior Ministry's building. After hours of gunbattles, the rebels took over the compound, leaving the body of a plainclothes police officer outside.

In Kiev, the interior minister said Ukrainian forces had repelled a rebel attack in Donetsk, but that clearly was not the case.

"I was driving and some people appeared with automatic weapons," said Vitaly, who said he was too fearful to give his last name. "They put me and my girlfriend on the ground and then they said: 'Run away from here!'

"I don't know who is fighting whom. We are standing here. We are afraid and shaking."

In Moscow, Russian President Vladimir Putin argued that substantive talks with representatives in eastern Ukraine had failed to start in earnest and that the cease-fire announced by Poroshenko amounted to an ultimatum to the rebels to disarm.

Putin warned that by ending the cease-fire, Poroshenko has made himself politically responsible for the fighting that began months before he was inaugurated in early June.

The Russian leader also denounced the Western threat of sanctions as blackmail, adding that Moscow wouldn't accept "ultimatums and mentor's tone."

Poroshenko announced the end of the cease-fire late Monday and by early Tuesday the military had made artillery and air strikes against separatist positions, Defense Ministry spokesman Oleksiy Dmytrashkovsky told the Interfax news agency. He said one service member was killed and 17 wounded in the previous 24 hours, and that an Su-25 attack aircraft was damaged. There was no comment on casualties from the rebels.

Near the village of Karlovka, 30 kilometers (20 miles) northwest of Donetsk, residents told The Associated Press that government forces and rebels began firing heavy weapons at each other from positions on either side of a bridge early Tuesday, just hours after the cease-fire expired.

"There was shooting near the water. Even the water was splattering out," said Inna Vladimirovna, who gave only her name and patronymic, fearful of being identified. "We know when they are just shooting to scare and when they are shooting to kill."

European leaders have been pressing Putin to persuade the rebels to lay down their weapons. The West says Russia backing the rebels, sending weapons, including tanks and rocket launchers, to them and allowing Russian citizens to cross the border to fight.

Russia rejects those claims and says it has only limited influence on the rebels, urging the Ukrainian government to negotiate directly with them.

Poroshenko held four-way phone talks with Putin, German Chancellor Angela Merkel and French President Francois Hollande on Sunday and Monday, but said those did not produce enough progress to merit extending the cease-fire.

European leaders had threatened a new round of economic sanctions against Russia, but ambassadors from the European Union's 28 governments decided Tuesday in Brussels that they were not ready to do that and put off a decision until Monday, according to an EU official.

That proposal would target those responsible for fomenting unrest in eastern Ukraine, according to a diplomat from a major EU country, and could include travel bans and asset freezes for both individuals and companies. The EU has so far sanctioned only individuals.

Both the EU official and the diplomat spoke on condition of anonymity because they weren't allowed to discuss the closed-door talks publicly.

Associated Press writers David McHugh in Kiev, Ukraine, Juergen Baetz in Brussels and Vladimir Isachenkov in Moscow contributed to this report.