Shell kills young footballers in crumbling Ukraine ceasefire

In another sign of Ukraine's ever more permanent looking break-up, Prime Minister Arseniy Yatsenyuk announced he was cutting subsidies to the rebel Donetsk and Lugansk regions, so as not to finance "terrorists".

A government source told AFP the measures would include scrapping pensions for hundreds of thousands of people living in separatist areas.

Although large-scale military action has ceased in the ex-Soviet republic since a September ceasefire was signed, sporadic artillery fire is exacting a daily toll, feeding fears that the truce will collapse.

On Wednesday, heavy bombardments raged around Donetsk's former international airport, where government forces are holding out against besieging separatists. One shell landed in a nearby school football field and killed two boys aged 14 and 18.

AFP journalists saw two corpses covered by a tarpaulin and witnesses said at least four others had been wounded.

International rights group Amnesty International demanded an investigation, saying those responsible must be brought to justice if it were found to constitute a war crime.

In "intensified" shelling elsewhere, two soldiers were killed and nine wounded in the past 24 hours, Ukrainian military spokesman Andriy Lysenko said.

"Also, the delivery of significant amounts of military hardware and personnel from Russia to territory controlled by rebels hasn't stopped," the spokesman said, reiterating constant allegations -- denied by Moscow -- that Russia is actively fighting on the rebel side.

US Secretary of State John Kerry warned Russia that more sanctions could be on the way if it failed to change course.

At the same he urged Kiev not to get drawn into "tit-for-tat" action, stressing the "need to continue to take the high road" in terms of sticking to the ceasefire.

The truce has become ever more fragile since rebels defied the government Sunday and held elections that they described as legitimising their two self-declared independent states.

Analysts say the Ukrainian government's biggest worry is the threat by Russian-backed separatists to capture the Azoz Sea port of Mariupol. From there, analysts say, separatists could push along the coast to establish a land corridor linking Russia to Crimea, which Moscow annexed in March.

'Troops, not pensions'

Poroshenko said late Tuesday he had ordered troop reinforcements to cities across the east to guard against any "offensive in the direction of Mariupol, Berdyansk, Kharkiv and Lugansk".

"Several new units and groupings have been formed, which will already allow us to stop any possible attack," Poroshenko said. "The supplying of our armed forces with the very latest technology -- offensive, reconnaissance, guided systems -- is continuing quite effectively."

Yatsenyuk signalled a tougher line on another front, announcing an end to subsidies for the eastern regions.

"We don't want to finance imposters and conmen," he said of the rebel leaders. "As soon as the terrorists clear out of there and we get back the territory, then we will pay every person the welfare payments they have the right to."

"To pay today is to directly finance terrorism," he said.

The only exception, he said, will be continued supplies of gas and power, because "the government will not allow these people to freeze, because this would lead to humanitarian catastrophe."

'600,000 could face cuts'

Although the decision is partly political, Ukraine's nearly bankrupt budget will also see considerable savings. A top security official told AFP there are 600,000 pensioners in rebel-held areas of Donetsk region alone, collectively receiving approximately 44 million dollars a month in benefits.

People who move out of the separatist zone to government-controlled territory will remain eligible for pensions, the official, who asked not to be named, said. Those who stay will not.

A subsequent step, the official said, will be to axe the entire state budget for the region, including all other public services.

"This money will be used to send humanitarian aid," the official said. There was no immediate information on exactly when the measures would be implemented.

The September peace accord aimed to save Ukraine's unity, with rebel zones being given broad autonomy, rather than independence. However in the wake of Sunday's elections, Poroshenko said separatists had "torpedoed" the proposal and that he was asking parliament to withdraw the autonomy offer.

For their part, separatists adopted a conciliatory tone to Poroshenko's comments, saying that they were ready to try and resurrect the peace process.

"We are prepared to work on a new version of the agreement," said the self-declared Donetsk and Lugansk people's republics in an unusual joint statement.

Russia said it "respected" the rebel elections, but Kiev, the European Union and United States all said that the polls had badly damaged the peace process.