ARTEMIVSK, Ukraine (AP) — Ukraine's military conceded Thursday that its forces had been overrun by Russian-backed separatist forces in another town in their battle to hold onto a strategically valuable railway hub.

A soldier wounded in combat for the town, Vuhlehirsk, said armored vehicles and tanks were used in the attack on government positions, forcing a hasty retreat.

Defense Ministry spokesman Vladislav Seleznyov said fighting is now under way to expel the rebels from Vuhlehirsk.

"We are trying to push the enemy out of the town," he said.

The loss of full control over town will further complicate efforts to resist the onslaught on Debaltseve, a nearby railway hub that sits between the two main rebel-held cities of Donetsk and Luhansk.

While clashes in east Ukraine rage, hopes are still being invested in reviving a peace process that has been undermined with every new day of fighting.

The leader of the separatists in the Luhansk region, Igor Plotnitsky, told a rebel news agency that the success of negotiations planned for Friday will hinge on lifting what he described as Ukraine's economic blockade of breakaway regions. Ukraine last year ordered the suspension of banking services in rebel territories, and stopped paying benefits to people not registered in government-controlled areas.

U.S. State Department spokeswoman Jen Psaki said Washington strongly condemns the attacks on Debaltseve and underlined that the town is about 13 kilometers (8 miles) beyond a cease-fire line agreed at September's peace talks in Minsk.

"There can also be no mistake about Russia's role in the escalation of violence, which is causing suffering and death among those Russia has claimed it wants to protect," she said.

Multiple flashpoints have flared up across eastern Ukraine since the start of the month, when full-blown fighting between Russian-backed rebels and government forces erupted anew following a month of relative tranquility. Since the conflict started in April, it has claimed more than 5,100 lives and displaced more than 900,000 people across the country, according to U.N. estimates.

Fighting also continued to rage Thursday near the main rebel-held city of Donetsk, where at least five civilians were killed by artillery shelling. Scared residents were huddling from the barrage in frigid basements, relying on humanitarian aid to survive.

"Our house is still OK, but it's really frightening to stay there, the walls are shaking," said Natasha Domyanova, who lives in the city's Petrovsky district. "It's damp and cold here. We call ourselves the children of the dungeon."

As Ukraine's military fortunes falter, the plight of civilians pinned down by fighting around Debaltseve is looking bleak.

Residents say the town has been without power, water and gas supplies for more than a week. Several hospitals in and around Debaltseve have been hit by rebel shelling in recent days, forcing the grievously sick and wounded to embark on trips of more than an hour along roads targeted by artillery.

Speaking in a hospital bed in the city of Artemivsk, 21-year-old Ukrainian army soldier Vadim Pugovetsa said the attack on Vuhlehirsk began with an apparent tactical feint.

"Some tanks tried to break through, but we repelled the first attack. But that was clearly a probing move," Pugovetsa said.

Armored vehicles and tanks charged toward the town through fields in a fresh assault two hours later, he said.

Pugovetsa said he managed to shoot two attacking infantrymen who emerged from their armored vehicles before being wounded by incoming gunfire. Regional officials loyal to Kiev said two civilians had been killed as a result of the fighting in Vuhlehirsk.

Until earlier this week, Pugovetsa might have been taken for treatment to the nearby hospital in the town of Svitlodarsk, but that was hit by rocket fire, forcing the evacuation of 48 patients.

National Guard medic Col. Ihor Ilkiv said multiple civilian hospitals have been damaged by what he called an intentional rebel attempt to strain the government's ability to provide medical treatment for troops.

Attacks on Ukrainian army position in Debaltseve have ticked up sharply since the start of the week, Ilkiv said.

"Every day, around 40 or 50 wounded guys are brought in. Two, three or more of them badly. We also get about 10 or more civilians," he said.

Eduard Basurin, the deputy commander of separatist forces in the self-styled breakaway Donetsk People's Republic, said rebel fighters were under instructions to refrain from targeting residential areas.

"When there is a war, anything can happen. But the (Donetsk People's Republic) doesn't fire on towns and villages on purpose," he said.

Basurin also claimed rebels now control the highway leading north out of Debaltseve and into government territory.

Despite claiming to rely solely on military equipment poached from the Ukrainian army, separatist forces have consistently deployed vast quantities of powerful weapons, some of which military experts say is not even known to be in Ukraine's possession.

Pugovetsa said the tanks he saw entering Vuhlehirsk appeared to be brand new and showed little sign of wear.

Ukraine and NATO say Russia directly abets rebels with manpower, arms and ammunition, all passed through the large section of border that was wrested from Ukrainian control last year. Moscow denies those claims.

On Thursday, the head of Ukraine's Joint Staff, Viktor Muzhenko, said he had intelligence proving that Russian servicemen were involved in combat alongside rebels, but said that regular Russian army units were not engaged in the fighting.

In Brussels, Dutch foreign minister Bert Koenders said the European Union had decided to extend a first set of sanctions against Russian and pro-Russia separatist officials which were due to expire in March by six months because of the continued fighting in eastern Ukraine.

Koenders said Thursday that all EU foreign ministers agreed on the decision and called it a "strong signal toward Russia."

In March, the EU imposed the first visa bans and asset freezes against officials linked to Russia's annexation of southern Ukraine's Crimean Peninsula.

Speaking to reporters in Washington, U.S. Secretary of State John Kerry urged Russia to stop providing separatists with heavy weapons.

"We want to see the Minsk agreement upheld," he said. "We want the violence to end."

Psaki urged Russia and the separatists to immediately cease offensive operations in eastern Ukraine, warning that "otherwise, U.S. and international pressure on Russia and separatists will only increase."

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Associated Press journalists Yuras Karmanau in Kiev, Balint Szlanko in Donetsk, Matthew Lee in Washington, and Raf Casert and Lorne Cook in Brussels, contributed to this report.