Municipal officials said up to 17 people, including children, were killed in fighting on Monday evening in a town north of Donetsk
* International experts unable to get to plane crash site again
* Ukraine accuses Russia of cross-border artillery shelling
* European officials debate sanctions (Adds reporting from scene of shelling)
By Aleksandar Vasovic
DONETSK, Ukraine, July 29 (Reuters) - Intense fighting between Ukrainian troops and pro-Russian rebels in eastern Ukraine killed dozens of civilians, soldiers and rebels, as Kiev pressed on with an offensive on Tuesday including near the wreckage of Malaysian flight MH17.
Shells hit the centre of Donetsk, a city with a pre-war population of nearly a million people where residents fear they will be trapped on a battlefield between advancing Ukrainian troops and Russian-backed rebels who have vowed to make a stand.
In Brussels, European officials met to discuss imposing the first broad-based sanctions aimed at sectors of the Russian economy, a step that would start a new phase in the biggest confrontation between Russia and the West since the Cold War.
Ukrainian forces have been pushing rebel units back towards their two main urban strongholds of Donetsk and Luhansk and have sought to encircle them in several places.
The government says its forces have retaken several villages in the rolling countryside near where the airliner crashed on July 17, killing all 298 passengers, most of them Dutch.
In Donetsk, the body of a dead man lay in rubble behind a badly damaged 10-storey residential building close to the city centre, hit by shelling. The side of the building was splintered. Rebels at the scene placed body parts on a nylon sheet and carried it on a stretcher to a green van.
"There, that's their 'separatists'. That's their 'rebel commander'," said a distressed woman in her 60s, gesturing towards the body. "They are killing neighbours. They are killing people, ordinary people."
Another middle aged woman, who gave her name as Katarina, charged out of the building next door carrying two bags.
"No more! I cannot live in this death row any more!" she said. "I am leaving! I don't know where!"
CLAIM, COUNTER-CLAIM
Municipal officials said up to 17 people, including children, were killed in fighting on Monday evening in the town of Horlivka, a rebel stronghold north of Donetsk that saw fierce battles between the rival forces in the last few days.
In the city of Luhansk, officials said five civilians were killed when shelling hit a retirement home.
"The enemy is throwing everything it has into the battle to complete encirclement of the DNR," Igor Strelkov, a Muscovite rebel commander, told journalists in Donetsk on Monday evening, referring to the self-proclaimed "Donetsk People's Republic".
A rebel source in Donetsk said reinforcements including military equipment and fighters had arrived across the nearby border from Russia into Ukraine. Reuters was not able to confirm that independently.
Rebel leaders insist publicly that Moscow is not supplying them. Russia also denies Western accusations that it is supporting the rebellion with arms and troops.
A spokesman for Ukraine's Security Council, Andriy Lysenko, blamed Russia for shelling a Ukrainian border crossing point and military positions from across the border to help the rebels.
Western countries say Moscow has stepped up its support for the rebels since the downing of the airliner, which Washington says was almost certainly shot down accidentally by rebels using an advanced Russian-made surface-to-air missile.
BANKING, TECHNOLOGY, ARMS
Leaders of the United States and major European powers agreed in a teleconference on Monday to impose sanctions on Russia's banking, technology and arms sectors over its backing for the separatists.
The United States and European Union have imposed sanctions for months against individuals they accuse of playing a role in Russia's threats against Ukraine, but until now had shied away from broader measures designed to hit Russia's overall economy.
European officials were meeting in Brussels to debate the measures on Tuesday, seeking steps that would hurt Russia without causing too much damage to their own economies.
Meanwhile on the ground, fighting has only intensified since the air crash, with Ukrainian government forces trying to press on with an offensive that saw them push rebels out of their bastion of Slaviansk at the start of the month.
Rebels who retreated from Slaviansk to Donetsk say they will make a stand inside the city. Fighting has also intensified in towns and villages near the border, where the government says it aims to assert control to block rebel reinforcements and arms shipments from Russia.
Lysenko said 10 Ukrainian soldiers were killed over the last 24 hours. Strelkov said his side had lost 30 fighters killed and wounded.
Plans to open a humanitarian corridor in Luhansk to allow residents to flee the fighting failed. The United Nations says more than 100,000 people have already fled Ukraine's tumultuous east.
Violence in the region also frustrated international experts' efforts to access the plane crash site for a third day. A Dutch police mission said it abandoned plans to travel there on Tuesday because of fighting along the route.
Fighting has impeded recovery of some of the remains from flight MH17 and made it impossible to reach the site to investigate the cause of the crash. Kiev and the rebels accuse each other of fighting in the area to keep inspectors away.
(Additional reporting by Natalia Zinets and Gabriela Baczynska in Kiev and Anthony Deutsch in Amsterdam; Writing by Gabriela Baczynska and Peter Graff)
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