KIEV, Aug. 19 - A gun battle broke out in the center of the rebel-held Ukrainian city of Donetsk and residents ran for cover from artillery fire on Tuesday, taking a government military offensive into the heart of the retreating pro-Moscow separatist rebellion, Reuters reported.

Russian President Vladimir Putin and his Ukrainian counterpart will meet next week for the first time in months to try to end their confrontation over the separatist rebellion in eastern Ukraine, their offices said.

In a prelude to the talks between Putin and Ukraine's Petro Poroshenko, German Chancellor Angela Merkel is to visit the Ukrainian capital Kiev on Saturday, her office said, to show support for the Ukrainian government.

A diplomatic solution would have to resolve a contradiction: with his troops advancing and victory possibly within reach, Poroshenko has little incentive to offer the kind of compromises that would allow Putin to achieve a face-saving deal.

Donetsk has for months been the headquarters of Ukraine's separatist rebellion, with rebel flags flying over administrative buildings and where residents strolled along the main avenue lined with flower bed and fountains.
On Tuesday afternoon, the center of the city was transformed into a battle zone.

A Reuters reporter said intense shooting broke out. Five or six rebel gunmen ran through a shopping mall car park, ducking behind cars and firing their guns.

It was not possible to determine at whom they were firing; there was no sign of Ukrainian troops and the rebels remained in control of the center.

In a park near the rebel headquarters building, residents fled when they heard the sound of shelling nearby. Shops closed early, and cars with gunmen inside sped through the streets, ignoring red traffic signals.

A few hours earlier, fighting broke out in Makiyivka, a neighborhood on the eastern edge of Donetsk that until Tuesday had not seen any combat.

A resident of Makiyivka who gave his name as Svyatoslav said he had seen separatist fighters turning back an ambulance from the scene of the fighting, telling the crew there was no one left alive for them to treat.

"They're having to retreat, they're not able to stand their ground the way they want to," he said of the rebels.
Ukrainian officials said their troops were also fighting rebels in the center of the other big separatist stronghold, the city of Luhansk, on the border with Russia.

The offices of the Ukrainian and Russian presidents said both men would attend a meeting in the Belarus capital, Minsk, on Aug. 26, which is also to be attended by EU officials, and the leaders of Belarus and Kazakhstan.

Officially, the meeting concerns relations between the EU and a customs union involving Russia, Belarus and Kazakhstan, but Ukraine will top the agenda.

The meeting will be the first between Putin and Poroshenko since a fleeting encounter in Normandy, France, in June at commemorations of the World War Two D-day landings.

European officials say privately that they will keep up pressure on Putin to not support the rebels, but at the same time Ukraine has to be persuaded not to ruthlessly press home its advantage on the battlefield.

That could humiliate the Kremlin and force it into an unpredictable reaction, officials say.

Stefan Meister of the Berlin-based German Council on Foreign Relations said Merkel would use her visit to Kiev to back Poroshenko, but also to test how flexible Kiev is willing to be to achieve a deal with Moscow. (rt/ez)