A gun battle broke out in the centre of the rebel-held Ukrainian city of Donetsk and residents ran for cover from artillery fire yesterday, taking a government military offensive into the heart of the retreating pro-Moscow rebellion.

Meanwhile, Russia and Ukraine said their presidents would meet top European Union officials and foreign policy chief Catherine Ashton in Belarus’s capital of Minsk on August 26 to discuss their confrontation over Ukraine, which has plunged relations to an all-time low.

The meeting will put Vladimir Putin and Petro Poroshenko in the same room for the first time since a passing encounter in France in June, though Ukrainian officials were at pains to say no face-to-face meeting between the two men was planned as yet.

Nonetheless, with a military offensive making inroads against pro-Russian separatist forces in eastern Ukraine, Ukrainian officials were upbeat that the Minsk meeting could provide a forum for bringing fresh pressure to bear on Putin to end Moscow’s support for the rebels.

“Today a clear diplomatic roadmap is taking shape. We can come up with new approaches that will allow us to talk about a move from war to peace,” said Valery Chaly, Poroshenko’s top foreign policy aide.

In a prelude to the talks, German Chancellor Angela Merkel is to visit the Ukrainian capital Kiev on Saturday, her office said, to show support for the Ukrainian government.

A diplomatic solution would have to resolve a contradiction: with troops advancing and victory possibly within reach, Poroshenko has little incentive to offer the kind of compromises that would allow Putin to achieve a face-saving deal.

Donetsk has for months been the headquarters of Ukraine’s separatist rebellion, with rebel flags flying over administrative buildings and where residents strolled along the main avenue lined with flower bed and fountains.

Yesterday afternoon, the centre of the city was transformed into a battle zone. A Reuters reporter said intense shooting broke out.

Five or six rebel gunmen ran through a shopping mall car park, ducking behind cars and firing their guns.

It was not possible to determine at whom they were firing; there was no sign of Ukrainian troops and the rebels remained in control of the centre.

A few hours earlier, fighting broke out in Makiyivka, a neighbourhood on the eastern edge of Donetsk that until yesterday had not seen any combat.