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Sergei Grits, Associated Press
Local residents display fragment of a shell after overnight shelling in Donetsk, eastern Ukraine, Friday, Aug. 8, 2014. At least three civilians have been killed and another 10 wounded in overnight shelling of the main rebel stronghold in eastern Ukraine besieged by government forces, officials said..

DONETSK, Ukraine — At least three civilians were killed and 10 others were wounded in overnight shelling of the main rebel stronghold in eastern Ukraine, a day after a leadership reshuffle appeared to signal Moscow's attempt to further distance itself from the pro-Russian insurgency.

The Donetsk city council said four apartment buildings in the southern part of the city were damaged by artillery barrages. Shocked residents gathered around in the morning, and some left flowers on the pavement to commemorate the victims.

"Nina, my godmother, was blown into pieces right in front of the apartment. They only were able to identify her by her dressing gown," said 55-year old Yevgeny Isayev. He pointed at a crater left by a projectile that landed next to the apartment building's entrance.

Another resident, Marina Barsuk, 53 said the shelling came a few days after rebels had positioned a Grad multiple-rocket launcher near the apartment building and fired at Ukrainian positions. She and other residents believed the shelling came from the Ukrainian side in retribution.

Ukrainian officials have adamantly denied that government forces were shelling populated areas and blamed civilian casualties on the insurgents, but witness testimony has pointed to the contrary.

"We are not shooting on Donetsk, we are liberating it," Andriy Lysenko, a spokesman for Ukraine's National Security and Defense Council, said Friday. "The residential areas are being shot at by the terrorists from their positions."

In an ominous signal that fighting may escalate further, Alexander Zakharchenko, a top rebel leader and the newly appointed prime minister of the self-proclaimed Donetsk People's Republic, boasted Thursday about seizing 18 Grad systems and a large number of tanks from a Ukrainian unit. His claim couldn't be independently confirmed.

Government forces and the rebels use the same Soviet-made Grad (Hail) launchers, which fire unguided rockets at a distance of up to 20 kilometers (12 miles). Their accuracy is very poor, making collateral damage from shelling populated areas inevitable.

The appointment of Zakharchenko, a native of eastern Ukraine, appears to be part of Moscow's efforts to counter Western claims that it was directing the mutiny. He succeeds Alexander Borodai, a Moscow spin doctor who reportedly played a role in Russia's annexation of Crimea before moving to eastern Ukraine. Borodai has worked for a nationalist tycoon with alleged connections to the Kremlin.

Several other top rebel leaders have quietly left the region over the past few weeks — another sign that the rebellion was losing steam.

Zakharchenko vowed to continue the fight but refrained from urging Moscow to send in troops to help, a call issued by many rebel leaders in the past. "Only moral support," he said when asked what assistance the rebels expect from the Russian government.

Putin has faced a squall of criticism from nationalist quarters in Russia for not sending the army into Ukraine.

Another Moscow resident at the helm of the Ukraine mutiny, Igor Girkin, reportedly a former officer of Russian special services better known by his assumed name of Strelkov, has become an iconic figure in nationalist circles. Some speak of him as a possible future leader of Russia — publicity that was certain to irk Putin.

Ukraine and the West recently have accused Moscow of beefing up its military on the border with Ukraine, dispatching what NATO estimates is 20,000 troops to the frontier. The deployment has fueled fears of a Russian invasion under the guise of restoring stability to eastern Ukraine.

However, Russia's ban on most of Western food imports announced Thursday seemed to signal that President Vladimir Putin has focused on economic rather than military options in his showdown with the West.

Ukraine on Friday retaliated against the Russian ban on its food and transit flights with a slew of its own sanctions, targeting 172 individuals and 65 companies from Russia and other nations, whom it didn't identify. Ukraine's Prime Minister Arseniy Yatsenyuk also said Friday that his government could go further and block Russian oil and gas shipments via Ukrainian pipelines.

That appears unlikely, however, given the EU's dependence on Russian energy exports.

Ukrainian troops routed the pro-Russian insurgents from smaller towns in the region earlier this month and have now encircled Donetsk, where fighting has crept closer to the city center. The city council said it was working to keep transport services running and to repair gas networks in apartment buildings. An estimated 300,000 of the city's 1 million residents have fled.

The insurgency in mostly Russian-speaking in eastern Ukraine flared up in April following Moscow's annexation of Crimea in response to the ouster of Ukraine's former pro-Russian president. Ukraine and Western countries have accused Moscow of backing the mutiny with weapons and soldiers. The West also accused Russia of most likely providing the insurgents with the surface-to-air missiles suspected of shooting down a Malaysia Airlines passenger jet over rebel-held territory on July 17, killing all 298 people on board.

The Russian government has repeatedly denied all those charges.

Vladimir Isachenkov in Moscow contributed to this report.