* Moscow calls shelling of Russian town "aggressive act"
* Ukraine denies firing over border, suggests rebels did so
* Kiev says targeted convoy bringing fighters from Russia
* Conflict has intensified sharply in recent days (Adds Luhansk fighting, quotes from rebels, civilians)
By Anton Zverev and Katya Golubkova
DONETSK, Ukraine/MOSCOW, July 13 (Reuters) - Russia threatened Ukraine on Sunday with "irreversible consequences" after a man was killed by a shell fired across the border from Ukraine, an incident Moscow described in warlike terms as aggression that must be met with a response.
Although both sides have reported cross-border shootings in the past, it appears to be the first time Moscow has reported fatalities on its side of the border in the three-month conflict which has killed hundreds of people in Ukraine.
Kiev called the accusation its forces had fired across the border "total nonsense" and suggested the attack could have been the work of rebels trying to provoke Moscow to intervene on their behalf. The rebels denied they were responsible.
Inside Ukraine, combat has intensified dramatically since a rebel missile attack that killed dozens of government troops on Friday. Local officials said on Sunday 18 people were killed in shooting incidents in the two main rebel-held cities.
Russia's Interfax news agency said fierce fighting had broken out on the outskirts of rebel-controlled Luhansk, a city near the border with Russia, and the Ukrainian army had attacked with a force of 70 tanks.
Kiev said it had bombarded a convoy of 100 armoured vehicles and trucks that had crossed into Ukraine carrying in rebel fighters from Russia. It also said seven of its troops had been killed in attacks.
Moscow's bellicose response to the cross-border shelling raises the renewed prospect of overt Russian intervention, after weeks in which President Vladimir Putin had appeared intent on disengaging, pulling back tens of thousands of troops he had massed at the frontier.
Russia sent Ukraine a note of protest describing the incident as "an aggressive act by the Ukrainian side against sovereign Russian territory and the citizens of the Russian Federation," the Russian Foreign Ministry said in a statement warning of "irreversible consequences".
"This represents a qualitative escalation of the danger to our citizens, now even on our own territory. Of course this naturally cannot pass without a response," Russian Deputy Foreign Minister Grigory Karasin told Rossiya-24 state TV.
Russia's Investigative Committee said a shell had landed in the yard of a house in a small town on the Russian side of the frontier, killing a man and wounding a woman. The Russian town is called Donetsk, sharing the name of the Ukrainian city of 1 million people that the rebels have declared capital of an independent "people's republic".
Andriy Lysenko, spokesman for Ukraine's National Security and Defence Council, said reports that Ukrainian forces were responsible were "total nonsense and the information is untrue".
"The forces of the anti-terrorist operation do not fire on the territory of a neighbouring country and they do not fire on residential areas," he said. "We have many examples of terrorists carrying out provocation shooting, including into Russian territory, and then accusing Ukrainian forces of it."
The rebels denied blame. Interfax news agency quoted the rebels' self-proclaimed first deputy prime minister, Andrey Prugin, as saying he was "90 percent certain" it was Ukrainian troops that had fired across the border, because the rebels were short on ammunition and cautious about where they fired.
The conflict in eastern Ukraine erupted in April when armed pro-Russian fighters seized towns and government buildings, weeks after Russia annexed Ukraine's Crimea peninsula in response to the overthrow of a pro-Moscow president in Kiev.
The fighting has escalated sharply in recent days after Ukrainian forces pushed the rebels out of their most heavily-fortified bastion, the town of Slaviansk.
Hundreds of rebels, led by a self-proclaimed defence minister from Moscow, have retreated to the Ukrainian city of Donetsk, built reinforcements and pledged to make a stand. The once-bustling city has been emptying in fear of a battle.
"Everybody here is sitting on a suitcase. People are only prevented from leaving by work - that is if they have any work. If they (the Ukrainian forces) are going to bomb then I shall, of course, go too," said Olga, 35.
On the streets there are fewer and fewer cars. Some drivers no longer bother to stop at red lights since there are no police around and few vehicles.
Rebel fighters vowed to fight to the end if the army comes.
"We are ready for them. We will not leave. Let women and children leave. But I don't care much for grown men going. They are cowards, rascals, scum," said a man named Lis, who described himself as an officer in the Vostok battalion, a rebel force.
Kiev says Moscow has provoked the rebellion and allowed fighters and heavy weapons to cross the border with impunity. It has struggled to reassert control over the eastern frontier, recapturing border positions from rebels.
The past two days have seen an escalation in retaliation after dozens of Ukrainian troops were killed in a rocket attack on a base near the border on Friday. Kiev said it killed hundreds of rebels in air strikes on Saturday, although there was no independent confirmation of such high casualties and the rebels denied suffering serious losses.
Ukrainian security spokesman Lysenko said on Sunday forces had used artillery to strike a convoy of about 100 armoured vehicles and trucks after confirming that the convoy was carrying "a large number of recruits" into Ukraine from Russia.
He said seven Ukrainian service members had died in attacks in the east in the past day.
The Donetsk city council said in a statement on its web site on Sunday that 12 people had been killed at a mining settlement near the Ukrainian city. It gave no details of who had fired. Municipal authorities in Luhansk, capital of the other rebellious eastern province, said six people were killed in clashes there. It also gave no details of who was to blame.
Western countries have threatened to impose harsh economic sanctions on Moscow if it intervenes openly. Russia denies fuelling the conflict, but Kiev and Western countries say it has supported the rebels.
In Kiev, President Petro Poroshenko's office said he had turned down an invitation to attend the World Cup football final in Brazil because of the situation in Ukraine. (Additional reporting by Natalia Zinets and Richard Balmforth in Kiev and Maria Tsvetkova in Donetsk; Writing by Peter Graff)
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