DONETSK Ukraine (Reuters) - Two of the most senior rebels battling government troops in eastern Ukraine quit on Thursday, deepening the disarray in a pro-Moscow separatist movement that is being pushed back by a Ukrainian military offensive.
The resignations came on the same day that artillery shells landed for the first time since the conflict began in the centre of the eastern city of Donetsk, the separatists' main stronghold.
The reverses suffered by the rebels could force a tactical rethink by Russian President Vladimir Putin.
While he has denied directly helping the rebels, his strategy of keeping Ukraine from integrating with the West has benefited from having a part of the country under the control of pro-Moscow separatists.
The most prominent of the separatists to resign on Thursday was a man who goes by the name of Colonel Igor Strelkov and who was defence minister in the self-proclaimed Donetsk People's Republic.
Nicknamed "Strelok" - Shooter - by fighters under his command, he had previously lived quietly in a Moscow suburb where he was known as Igor Girkin. Kiev alleged he was a Russian intelligence officer, which Moscow denied.
Vladimir Antyufeyev, deputy prime minister of the separatist entity in Donetsk region, told Reuters that Strelkov was moving to another, less senior post. He said the new defence minister would be Vladimir Kononov, a native of Donetsk.
"The enemy will be broken. Victory will be ours," Antyufeyev said when asked what prospects for success the rebels now had after the series of resignations.
The head of the self-proclaimed rebel government in Luhansk region, which neighbours Donetsk, also announced he was stepping down. Valery Bolotov said he was injured and could not carry on his duties.
A week ago, Alexander Borodai, prime minister of the Donetsk People's Republic, also quit.
The sense of government forces tightening the noose around the rebels was clear at the separatist headquarters in the centre of Donetsk on Thursday.
A Reuters reporter was interviewing Andrei Purgin, deputy to the new separatist prime minister, when artillery shells landed nearby. One man shouted: "Go to the cellar!" and those in the building headed for the stairs, some at a run.
The crisis in Ukraine has dragged ties between Russia and the West to their lowest ebb since the Cold War, and killed hundreds of people, including the passengers and crew of a Malaysian airliner downed over the battle zone last month.
The European Union and the United States accuse Russia of arming the separatists and they have imposed sanctions targeting sectors of the Russian economy, including energy, technology and finance.
Russia says the West is abetting the Ukrainian government in persecuting millions of Russian-speakers who live in eastern Ukraine. It reacted to the sanctions by restricting imports of food products from Western countries.
Putin on Thursday travelled to Crimea, the Ukrainian region his forces annexed earlier this year.
In a speech to Russian ministers and members of parliament assembled in a Crimean hotel, Putin struck a tone that was low-key and conciliatory, saying he wanted to do everything he could to halt the bloodshed in Ukraine.
"We must calmly, with dignity and effectively, build up our country, not fence it off from the outside world," Putin said. "We need to consolidate and mobilise but not for war or any kind of confrontation, ... for hard work in the name of Russia."
Putin's comments lifted the rouble and Russian stocks.
NATO Secretary-General Anders Fogh Rasmussen said, however, that the Russian leader had sounded dovish in the past yet had not followed up his words with concrete actions.
Illustrating the economic pain the standoff is inflicting on Russia, energy giant Rosneft asked the government to lend it $42 million of cash that had been earmarked for Russian pensioners to help it weather the sanctions.
A huge Russian convoy heading slowly towards eastern Ukraine could be a new flashpoint. Moscow says it is carrying 2,000 tonnes of water, baby food and other aid for people in rebel-held areas.
Some Western officials have said they believe the convoy could be a cover for a Russian military incursion - something Moscow has described as "absurd."
By evening on Thursday, the convoy had stopped near the Russian settlement of Kamensk-Shakhtinsky, about 20 km (12 miles) from the border with Ukraine.
One of the truck drivers told Reuters it would be heading to the crossing point at Izvaryne, which is held by the rebels.
If the convoy tries to enter Ukraine without the consent of the authorities in Kiev, there is a risk the Ukrainian government and its Western allies could view that as an illegal Russian incursion, further heightening tensions.
However, there was still a possibility that a deal could be brokered. Russia's foreign ministry said it was in intensive negotiations with the Ukrainian government and the Red Cross.
Relief agencies say people living in Luhansk and in Donetsk are facing shortages of water, food and electricity after four-months of conflict in which the United Nations says more than 2,000 people have been killed.
Kiev blames Russia and the separatists for the plight of the civilians, but their situation has grown more acute as the Ukrainian military has pressed its offensive - including in areas where civilians are living.
On Thursday, Kiev's forces took control of the settlement of Novosvitlivka, which they said blocked off the last route the separatists could use to move between Luhansk and Donetsk.
Meanwhile, Ukrainian troops have been slowly encircling Donetsk, the regional hub with a peacetime population of nearly a million.
Liliya Chalina, 54, lived in a residential block in Donetsk whose wall was smashed by a projectile on Thursday. "It came straight into the apartment. Thank God I was not in the kitchen," she said.
"My husband promised me that shells would never hit our house, only large buildings. But look at what has happened."