KIEV, Sept. 2 - EU officials proposed sanctions on Tuesday to starve Russian firms of cash as punishment for Moscow's role in Ukraine, where rebels said they were storming Donetsk airport, potentially their biggest prize since turning the war's tide last week, Reuters reported.

Western countries accuse Moscow of sending armored columns of troops into Ukraine, where the momentum in a five-month war shifted last week decisively in favor of pro-Russian rebels, who are now advancing on a new front towards a major port.

Russia denies its troops are involved in fighting on the ground, in the face of what Western countries and Ukraine say is overwhelming evidence.

In Washington, Pentagon spokesman Rear Admiral John Kirby estimated there were thousands of Russian forces inside Ukraine.

“You want to talk provocative? Let's talk about a few thousand Russian troops inside eastern Ukraine, continuing to support separatists, with heavy weapon systems, and more than 10,000 troops arrayed along the southeast border with Ukraine,” Kirby told a news briefing.

Rebels in Donetsk, the biggest city under their control, said they were close to recapturing its airport from Ukrainian troops who had defended it since capturing it two months ago.

"The airport is 95 percent under our control. Practically, we are holding it by now. Some remaining Ukrainian troops need to be cleared," said Aleksandar Timofeyev, a leader of one of the main rebel units in Donetsk. "The Ukrainian army is retreating. It's more of a flight by now. Reasonable ones give up their weapons and go. Others stay in the ground for good."

A rebel source said an attempt to storm the airport was under way: "It will soon be over".

Losing control of the airport in Donetsk would be a humiliating reversal for government forces that recaptured it after going on the offensive in June. Ukrainian forces abandoned the airport at the other rebel stronghold, Luhansk, on Monday.

In an interview with Reuters, Kiev's governor for the Donetsk region, now operating out of the province's second-biggest city, Mariupol, while the regional capital, Donetsk, is in rebel hands, described the Russian presence as an "invasion".

Western leaders including U.S. President Barack Obama and German Chancellor Angela Merkel, mindful that the Russian forces they say have crossed into Ukraine still represent just a fraction of Moscow's potential might in the area, have so far avoided that word, instead calling it an "incursion".

"A huge amount of weapons are unfortunately crossing the Russian border. They (the Russians) bring them to Ukraine to bring death and destruction and they try to annex part of Ukrainian territory," the governor, wealthy industrialist Serhiy Taruta, told Reuters. "So it is very difficult to qualify it any way other than as an invasion."

European leaders asked the EU on Saturday to draw up new sanctions to punish Moscow, which are expected to be unveiled on Wednesday and adopted by Friday. The United States is also planning new sanctions but is keen to maintain Western unity by not getting in front of its European allies.

Outlining the new proposals on Tuesday, European diplomats described a number of mainly technical measures that would have the combined effect of making it harder for companies in Russia's state-dominated economy to obtain overseas financing.

U.S. and EU sanctions steadily tightened since March have already made it hard for many Russian firms to borrow, scaring investors and contributing to billions of dollars in capital flight that has wounded the Russian economy. Moscow has responded by banning most imports of Western food.

"We need to respond in the strongest possible way," said the EU's newly named incoming foreign policy chief, Italian Foreign Minister Federica Mogherini. "Things on the ground are getting more and more dramatic. We speak of an aggression, and I think sanctions are part of a political strategy." (rt/ez)