* Ukraine says 15 bodies retrieved from charred convoy
* Separatists deny responsibility
* Government says engaging rebels in central Luhansk
By Natalia Zinets and Richard Balmforth
KIEV, Aug 19 (Reuters) - Fifteen bodies have been recovered from the site of an artillery strike on a refugee bus convoy in east Ukraine, but further operations have been suspended due to renewed fighting in the area, a Ukrainian military spokesman said on Tuesday.
The Kiev military has said pro-Russian separatists attacked the convoy on Monday, killing dozens of people including women and children, but it has yet to provide visual evidence. The separatists denied responsibility, and at least one of their leaders suggested no attack had occurred.
Ukrainian forces are tightening their squeeze on the rebels as they try to end a four-month conflict that has killed more than 2,000 people and raised Western fears of Russian military intervention, despite denials from Moscow.
Military spokesman Andriy Lysenko said the 15 bodies had been recovered on Monday night from the charred wreckage of the convoy which included buses and cars, and operations had continued into Tuesday.
But he later said that further fighting in the area had brought this to a halt. "Work has now been suspended because military activity has begun again in the area," Lysenko told a news briefing.
Ukraine says the attack occurred near the city of Luhansk, close to the border with Russia, in an area where there were intense artillery exchanges between government forces and pro-Russian separatists.
The military said on Monday that many of those killed had been burned beyond recognition. Many bodies had been blown apart by the blast.
The U.S. State Department condemned the attack but said it could not confirm who was responsible.
"We strongly condemn the shelling and rocketing of a convoy that was bearing internally displaced persons in Luhansk ... Sadly, they were trying to get away from the fighting and instead became victims of it," State Department spokeswoman Marie Harf told a news briefing in Washington.
FIGHT FOR LUHANSK
Government forces, after faltering in their campaign early on, have been progressively encroaching into rebel-held territory and now say they encircle Donetsk as well as Luhansk, the two main cities controlled by the separatists.
With victory potentially within reach, a ceasefire which Russia is pressing for does not seem to be to Kiev's advantage.
Lysenko reported further progress on Tuesday, saying that government forces were now engaged with the rebels in the centre of Luhansk. "One district of the town has been liberated. Fighting is going on in the central part of the town," he said.
The industrial city has been largely cut off for weeks and is now in its 17th day without water and regular supplies of electricity, hitting mobile and landline phone connections.
A statement issued by the press service of the Luhansk municipality painted a picture of misery and fear for inhabitants.
"Overnight there was fresh shelling. The centre of the town has seriously suffered, particularly near the central market ... As a result of the armed clashes, civilians have been wounded and killed. There is further destruction," it said.
Fires had broken out in several places after shelling. Only vital foodstuffs were on sale. "Bread is being sold from vehicles, with big queues forming ... Interrupted supplies of food, medicines and fuel to Luhansk is a particularly acute problem," the statement said. (Reporting by Natalia Zinets; Writing By Richard Balmforth; Editing by Mark Trevelyan)
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