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Kiev - Ukraine said its forces had attacked and partly destroyed a Russian armoured column that entered Ukrainian territory overnight, a firefight which if confirmed would mark a dramatic worsening of the conflict.
Russia's government denied its forces had crossed into Ukraine, and accused Kiev of trying to sabotage deliveries of aid, but European capitals accused the Kremlin of escalating the fighting.
Kiev and its Western allies have in the past repeatedly accused Russia of arming pro-Moscow separatist rebels in eastern Ukraine, and of sending undercover military units onto Ukrainian soil.
But if it is able for the first time to show the remains of Russian military vehicles captured or destroyed on its territory, that would give extra force to Kiev's allegations - and possibly spark a new round of sanctions against the Kremlin.
Andriy Lysenko, a spokesperson for the Ukrainian military, told a news briefing that Kiev's forces had picked up a Russian military column crossing the border under cover of darkness.
"Appropriate actions were undertaken and a part of it no longer exists," Lysenko said.
Ukrainian President Petro Poroshenko briefed British Prime Minister David Cameron on the incident and told him a "significant" part of the Russian column had been destroyed, according to statement from Poroshenko's office.
Britain summoned Russia's ambassador to ask him to clarify reports of a military incursion into Ukraine.
Flow of weapons
Earlier on Friday, responding to reports that a Russian column had entered Ukraine overnight, Nato Secretary-General Anders Fogh Rasmussen said the alliance had seen what he called a Russian incursion into Ukraine.
"It just confirms the fact that we see a continuous flow of weapons and fighters from Russia into eastern Ukraine and it is a clear demonstration of continued Russian involvement in the destabilisation of eastern Ukraine," the Danish Nato chief said.
A spokesperson for Russia's border guards service was quoted by Russian news agencies as denying that any Russian military units had entered Ukraine.
In a statement issued by the Russian foreign ministry, Moscow accused Ukrainian forces of intensifying the fighting against pro-Moscow separatists in eastern Ukraine in an attempt to sabotage Russian efforts to get aid into rebel-held areas.
After Ukraine reported the firefight, Russia's rouble currency weakened against both the dollar and the euro. Russian shares were also dragged lower.
The dollar hit a three-week low against the safe-haven Swiss franc.
