Pro-Russian separatists have fired on a Ukrainian broader patrol ship in the Sea of Azov by firing artillery from the shore, and a Ukrainian military spokesman said a rescue operation was under way.
There is no information on how bad the damage is or if there are any casualties.
Spokesman Andriy Lysenko said the vessel was a naval cutter. There was no information on the number of people on board.
The pro-Russian rebels claimed responsibility for the attack near the city of Mariupol, located about 50 kilometers [30 miles] from the Russian border and about 35 kilometers from Novoazovsk, which was overtaken by pro-Russian rebels over the weekend.
The separatists have been fighting government forces since April in a conflict that has killed some 2,600 people, but this was the first naval attack of the war.
It came after rebel forces opened a new front in the fighting last week, breaking through to the Azov Sea in Ukraine's southeast.
“The militia have dealt the enemy their first naval defeat,” Igor Strelkov, a former separatist military commander, said on the social media network VKontakte.
Putin pushes statehood
Russian President Vladimir Putin is calling for immediate and substantive talks on statehood for southeastern Ukraine.
Putin said Sunday on state TV that such a move is needed "to protect the lawful interests of people" who live in the region.
Until now, Moscow has called for increased but still limited autonomy for eastern parts of Ukraine, where many Russian speakers live and where pro-Russian separatists are active.
European Union leaders meeting in Brussels say they have asked the European Commission for a list of new measures to take against Russia if it fails to reverse course in Ukraine.
A statement by the EU leaders demands that Russia "immediately withdraw all its military assets and forces from Ukraine." Despite overwhelming evidence to the contrary, Russia denies it has troops in Ukraine.
Separatist leader Oleksandr Zakharchenko said Russian soldiers are there, but only as volunteers while on leave from the Russian army. NATO estimates at least 1,000 Russian troops are present inside Ukraine.
Arms for Ukraine
News of the attack came a short time after a prominent U.S. lawmaker said the United States and Europe should provide arms to Ukraine's military to combat what he called a Russian invasion.
Senator Robert Menendez, chairman of the U.S. Senate Foreign Relations Committee, appeared on CNN television from the Ukrainian capital, Kyiv, on Sunday.
Menendez said "thousands" of Russian troops are in Ukraine supporting rebel separatists, and that the U.S., European Union and NATO "have to give the Ukrainians the fighting chance to defend themselves."
The Democrat from the northeastern state of New Jersey said he is not suggesting U.S. or NATO troops be sent to Ukraine.
U.S. Senator Dianne Feinstein told NBC television Sunday she believes the situation in Ukraine is deeply personal for Putin, and she said he may be calling the shots himself.
"People say, ‘Just wait till the sanctions bite and the economy slips.’ I don't think so. I think if Russians follow him, and … they are following him … the Russians are very brave and very long suffering, and they will tough out any economic difficulty," she said.
The Democrat, who represents the West Coast state of California and chairs the Senate Intelligence Committee, said senior U.S. officials, such as Secretary of State John Kerry, should be sent to talk directly with Putin.
Also Sunday, the European Union threatened Russia with new sanctions if Moscow continues its military activity in eastern Ukraine.
But the EU is deeply divided on the severity of possible actions, as many of the 28 members of the European bloc are dependent upon Russian gas and trade.
EU leaders meeting in Brussels announced early Sunday after lengthy talks that they have asked the European Commission for a list to be prepared within a week of new measures to take against Russia if it fails to reverse course in Ukraine.
European Council President Herman Van Rompuy said, "The European Council says that it stands ready to take further significant steps in the light of the evolution of the situation on the ground and it requests the commission to urgently undertake preparatory work, together with [European External] Action Service and present proposals for consideration within, within a week."
German Chancellor Angela Merkel said Putin must act quickly to avoid new sanctions.
"There is very significant inflow of troops and material from the Russian side into Ukraine, into Ukrainian territory, which means that there is a significant escalation on the ground, at the same time we said, and this is the view of all the members of the European Council, that there cannot be a military solution to this conflict," said Merkel.
"And that is to say that all our efforts must go towards keeping the channel of communication open and to try time and again, as President [Petro] Poroshenko also pointed out, to bring about a mutually agreed cease-fire," she added.
British Prime Minister David Cameron said Russia must realize its relationship with the West has a bleak future it Moscow continues on its current path in eastern Ukraine.
"It is a deeply serious situation and we have to show real resolve, real resilience in demonstrating to Russia that if she carries on in this way, the relationship between Europe and Russia, Britain and Russia, America and Russia will be radically different in the future," said Cameron.
"They cannot go on in this way. We know from European history the danger of the territorial integrity of a nation state being threatened and undermined in this way and we have to send the clearest possible signal and tonight we have taken some important steps in doing just that," he said.
A joint statement by the EU leaders demanded Russia "immediately withdraw all its military assets and forces from Ukraine."
Despite overwhelming evidence, Russia denies it has such forces in Ukraine.
While rebel leaders admit that Russian soldiers are fighting in Ukraine, separatist leader Zakharchenko insisted they are doing so as volunteers while on leave from the Russian army.
Earlier in the week, NATO estimated at least 1,000 Russian troops are present inside Ukraine.
Economic backlash feared
New sanctions on Russia would require unanimity among EU leaders, and many are wary of taking strong measures in fear of an economic backlash.
The United States has expressed strong support for the latest European actions, saying in a statement Washington is "working closely with the EU and other partners to hold Russia accountable for its illegal actions in Ukraine, including through additional economic sanctions."
U.S. President Barack Obama is scheduled to travel to Wales this week for a NATO summit that will address the crisis and formulate a strategy aimed at deterring what is widely seen as Russia's territorial overreach.
The NATO summit, which begins on Thursday, will also address the drawdown in Afghanistan.
Some information for this report provided by Reuters and AFP.