Two Ukrainian helicopters were shot down Friday as Ukraine launched its first major offensive against the pro-Russia forces that have seized government buildings in the east. The Kremlin said Kiev's move against the insurgents “destroyed” hopes for peace in the region.

Fighting broke out around dawn near Slovyansk, a city 160 kilometers (100 miles) from the Russian border that has become the focus of the armed insurgency against Ukraine's interim government. Two helicopter crew were killed in the crashes, both sides said, and a pro-Russia militiaman was reported killed.

One of the helicopters was hit by a surface-to-air missile, the Ukrainian Security Service said, adding that the sophisticated weapon undercut Russia's claims the city was simply under the control of armed locals. The agency said its forces were fighting “highly skilled foreign military men” in Slovyansk.

Russian President Vladimir Putin's spokesman said the offensive “effectively destroyed the last hope for the implementation of the Geneva agreements” that aimed to defuse the crisis.  A day earlier Putin warned Ukraine not to move against the insurgents and said it should withdraw its military from eastern and southern regions.

Ukraine, a nation of 46 million, is deeply divided between those in the west who favor closer ties with Europe and many Russian-speakers in the east who look toward Moscow.

Ukraine has accused Russia of backing the insurgents who have seized government buildings in 10 eastern cities and fears that Moscow is seeking a pretext to invade; Russia has already stationed tens of thousands of troops in areas near the Ukrainian border.

Russian troops backed separatists in Ukraine's Black Sea peninsula of Crimea in March, then annexed the region after a referendum called for secession.

A deal in Geneva last month aimed to get those who had seized government buildings in Ukraine to leave and calm down the tensions that have prompted the United States and the European Union to slap Russia with sanctions for its actions in Ukraine.

Ukraine's acting president Oleksandr Turchynov admitted earlier this week that the central government had lost control of the east, and said some government troops and police there were “either helping or cooperating with terrorist organizations.” He said efforts should be focused on preventing the instability from spreading to other parts of the country.

Russia's foreign ministry on Friday accused Ukraine's fledging government of using “terrorists” from ultranationalist organizations for the military operation. It also claimed that Kiev deployed tanks and helicopters that were “conducting missile strikes on protesters,” something that neither side in Ukraine reported. An Associated Press crew also saw no evidence of missile strikes in Slovyansk.

The foreign ministry also cited insurgents in Ukraine as saying that some of the government attackers spoke English.

Putin's spokesman Dmitry Peskov said the Kremlin had sent envoy Vladimir Lukin to Ukraine's southeast to negotiate the release of seven foreign military observers who were being held hostage by pro-Russia militia in Slovyansk.

Ukrainian troops met fierce resistance Friday but managed to take control of nine checkpoints on the roads around Slovyansk, Interior Minister Arsen Avakov said in a statement. He called on the insurgents to lay down the arms and release the hostages they have taken.

By afternoon, Ukrainian Security Service said half of Slovyansk was already under control of the Ukrainian army _ a claim that could not be immediately verified.

“We are ready to negotiate with protesters and their representatives,” Avakov said. “But for terrorists and armed separatists there is only punishment.”

The city center appeared quiet but empty and tense Friday morning. On the road leading into Slovyansk from the south, an Associated Press reporter saw six parked Ukrainian armored vehicles Friday morning and an AP cameraman saw black plumes of smoke on the edge of the city, where an emergency siren had sounded at dawn.

The spokesman for the military wing of the pro-Russia forces, who would give only his first name, Vladislav, said fighting had broken out at several points around the city. He claimed that Ukrainian troops had made incursions into the city itself.

That claim could not be independently confirmed.

Hours after Putin said Thursday that Ukraine pull back its military from eastern and southern regions, Turchynov ordered that the military draft be renewed, citing “threats of encroachment on the nation's territorial integrity” and interference by Russia in its internal affairs.

Kiev's interim government came to power after President Viktor Yanukovych fled to Russia in February, drummed out by months of anti-government protests. Ukraine plans to hold a new presidential election on May 25. (AP)