KIEV, Sept. 1 - President Petro Poroshenko accused Russia on Monday of "direct and undisguised aggression" which he said had radically changed the battlefield balance as Kiev's forces suffered a further reverse in their war with pro-Moscow separatists, Reuters reported.

In the latest in a string of setbacks in the past week, Ukraine's military said it had pulled back from defending a vital airport in the east of the country, near the city of Luhansk, where troops had been battling a Russian tank battalion.

Poroshenko said in a speech there would be high-level personnel changes in the Ukrainian armed forces, whose troops fled a new rebel advance in the south which Kiev and its Western allies say has been backed up by Russian armored columns.

Russian President Vladimir Putin, who called on Sunday for immediate negotiations on the "statehood" of southern and eastern Ukraine, blamed Kiev's leadership for refusing to enter into direct political talks with the separatists.

European Union leaders decided at a summit on Saturday that the direct engagement of Russian troops in the war - still denied by the Kremlin - called for a stepping up of economic sanctions unless Moscow pulled its soldiers back.

With German Chancellor Angela Merkel stressing that accepting Russia's behavior was not an option, EU ambassadors were to start discussing a new package of measures that could include a ban on Europeans buying Russian government bonds, EU sources said.

Until last week Ukraine had appeared close to crushing the four-month rebellion in the east, which erupted after a pro-Moscow president was forced out of power by popular protests. But then the rebels opened a new front to the south on the coast of the Sea of Azov, pushing towards the city of Mariupol.

Poroshenko repeated Kiev's belief that Russian forces are helping the rebels to turn the tide of the war. "Direct and undisguised aggression has been launched against Ukraine from a neighboring state. This has changed the situation in the zone of conflict in a radical way," he said in his speech at a military academy in Kiev.

Defense Minister Valery Heletey added on his Facebook page that Ukraine no longer faced a threat from separatists but outright war with Russian troops. "Unfortunately, in such a war, the losses will be numbered not in their hundreds, but in thousands, even tens of thousands," he said. "We must refrain from panic and show that Ukrainians are not about to surrender."

Military spokesman Andriy Lysenko said Ukrainian forces had pulled back from the airport near Luhansk. However, they had destroyed seven Russian tanks and identified a major build-up of Russian forces to the north and south of the city.

"According to our operational data, there are no fewer than four (Russian) battalion-tactical groups in Ukraine," he told reporters, adding that each one comprised 400 men.
Speaking during a visit to Siberia, Putin repeated his call for talks. "The current Kiev leadership does not want to carry out a substantive political dialogue with the east of its country," state news agency Itar-Tass cited him as telling journalists. (rt/ez)