Hundreds of pro-Russian separatists overran more Ukrainian government buildings near the Russian border Tuesday, seizing a prosecutor's office in Luhansk and attacking a police station with clubs and automatic weapons.
Local authorities say police did not offer resistance, and witnesses say gunmen raised a separatist flag over government headquarters in the city of 450,000 residents.
The takeover appears to give pro-Moscow rebels control of a second provincial capital in the east, after separatists seized control of Donetsk Monday and set a referendum on secession for May 11. A similar vote last month led to Russia's annexation of the Crimean peninsula.
The latest takeovers come as negotiations resumed to gain the release of seven European observers taken hostage last week in the nearby city of Slovyansk.
The self-proclaimed pro-Russian mayor of that city said Tuesday he would be willing to swap the observers for pro-Russian activists held by Ukrainian authorities.
In Washington, U.S. Secretary of State John Kerry Tuesday called on Russia to leave Ukraine in peace. In an address to the non-governmental Atlantic Council, Kerry linked Moscow's military presence in Ukraine to an attempt to change the security landscape of eastern Europe.
Kerry also called on other NATO countries to make "credible commitments" to increasing spending on the military alliance over the next five years.
In Moscow, Russian President Vladimir Putin threatened to reevaluate the role of Western investors in Russia's energy-driven economy, if sanctions imposed by Washington and the European Union continue.
Moscow also said EU sanctions were a "direct invitation for local Neo-Nazis" to continue "lawless acts" in southeast Ukraine. The Kremlin is promising a "painful" response to the sanctions.
The latest EU sanctions list includes Russian Deputy Prime Minister Dmitry Kozak and General Valery Gerasimov, the chief of staff of Russia's armed forces. Those listed by the United States include President Putin's envoy to Crimea, the chief of the service protecting the Russian president, and the head of Russia's largest state-owned oil producer.