UPDATE: Clashes, fire in Odessa leave dozens dead as Ukraine crisis flares (w/ video)SLAVYANSK, Ukraine (CNN) -- Violence escalated Friday in southern Ukraine, with pro-Russian separatists reportedly shooting down two Ukrainian helicopters amid deadly clashes.
By: Nick Paton Walsh, Laura Smith-Spark and Victoria Butenko, CNN
SLAVYANSK, Ukraine (CNN) -- Violence escalated Friday in southern Ukraine, with pro-Russian separatists reportedly shooting down two Ukrainian helicopters amid deadly clashes.
The deadly fighting came the same day that U.S. President Barack Obama and German Chancellor Angela Merkel pledged to seek harsher sanctions against Russia if Ukraine doesn't stabilize in time for elections this month.
More than a dozen people were killed and dozens more were wounded in street fighting that pitted pro-Russian separatists against Ukrainian forces and those who support the Kiev government.
At least four people were killed and 40 wounded in fighting in Odessa, and another nine died in and around Slavyansk, according to the regional police administration.
Police said another 31 people died during a fire at a trade union building in Odessa, the latest flashpoint in the crisis that has pitted those who support the new government in Kiev and those who want to break away from Ukraine. Authorities initially reported 38 people had died, but later revised it.
It was unclear how the fire began, but it comes amid growing violence that has rocked the region.
Obama criticized Russia over its actions in Ukraine and its response to international efforts to resolve the situation, saying, "there just has not been the kind of honesty and credibility about the situation there and the willingness to engage seriously" in finding a diplomatic solution.
He added that the United States and Germany are "united in our determination to impose costs on Russia for its actions," including sanctions, and also are united "in our outrage" over the treatment of German monitors held by pro-Russian forces in Ukraine.
If Russia "continues on its current course" in Ukraine, the United States and its European allies "have a range of tools at our disposal, including sanctions targeted at certain sectors of the Russian economy," and will "move quickly" on taking additional steps, Obama said.
Merkel said that a May 12 meeting of European Union foreign ministers will "play a very important role" in determining the further response to Russia's actions in Ukraine, and that the release of German monitors being held by pro-Russian forces was "a very crucial step that needs to happen for us."
Ukrainian helicopters downed
Two Ukrainian government helicopters were brought down in the flashpoint city of Slavyansk on Friday, apparently by fire from pro-Russian separatists, Ukraine's Defense Ministry said.
The violence came as Ukrainian security forces launched their most intensive effort yet to try to dislodge pro-Russian separatists.
Five pro-Russian separatists and two civilians were killed in Slavyansk in a Ukrainian military operation aimed at dislodging the separatists, said the city's self-declared mayor, Vyacheslav Ponomaryov.
Two Ukrainian soldiers were killed during an attack near Slavyansk, the Ukrainian Defense Ministry said Friday. The attack targeted the 95th Detached Airborne Brigade in the village of Andriyivka, the ministry said.
The gunmen also blocked a bridge in the area, using local residents, including women, according to the ministry.
CNN could not independently confirm the casualties.
Residents of Slavyansk were warned to stay home and avoid windows as the latest phase of the authorities' "anti-terrorist operation" got under way.
The two Mi24 helicopters were downed with mobile air defense systems, killing two military officers and injuring others, according to the Ukrainian Defense Ministry website. Another army helicopter, an Mi8, was damaged but no one was hurt, it said.
Militants took one badly injured pilot hostage after his helicopter was forced to make an emergency landing, the ministry said, and efforts to free him are ongoing.
Ukraine's security service, the SBU, said one helicopter that came under attack was carrying medics, one of whom was injured.
"The terrorists opened fire at Ukrainian units with some heavy guns, including grenade launchers and portable air defense systems," Interior Minister Arsen Avakov said in a post on his official Facebook page.
Four separatists have been detained at a checkpoint on suspicion of involvement in bringing down the aircraft, the Defense Ministry said.
Clashes reported in Slavyansk
Russian state news agency RIA Novosti earlier reported that one Russian separatist was killed and another wounded in Slavyansk.
Ponomaryov said Slavyansk was under attack in a video statement published by local media and posted to YouTube.
"We are being stormed, we have got casualties. I'm asking children, women and the elderly not to leave their homes and I ask armed men to provide us all the assistance they can," he said. "I think we will be able to successfully stand up for our city. Thank you for your attention, thank you for your assistance, we will win."
The operation, also targeting the town of Kramatorsk, is aimed at pro-Russian militia groups that have taken effective control of swaths of eastern Ukraine.
What's not yet clear is whether the escalating violence may prompt a response by Russia, which has previously said it has the right to intervene in Ukraine to protect Russian speakers.
Russia has called for a session of the U.N. Security Council to be held Friday because of the situation in Ukraine and "actions by the Kiev powers," a spokesman for the Russian U.N. mission said.
A senior State Department official said U.S. Ambassador to the United Nations Samantha Power would argue at the meeting that Russia has not taken any steps to de-escalate the situation in Ukraine since an international agreement was signed last month.
Russia slams 'punitive' operation
The Russian Foreign Ministry earlier blamed ultranationalist Ukrainian groups for what it called a punitive military operation in Slavyansk. It called Kiev's use of its military criminal, and described calls by the government to launch a national dialogue as "hypocrisy."
Russian President Vladimir Putin's spokesman, Dmitry Peskov, also told CNN that Ukraine's military operation was "totally unacceptable."
He said it was "the last nail in the coffin" for the deal agreed to last month in Geneva, Switzerland, which called for illegal militia groups to disarm and vacate seized buildings.
Putin has been kept fully informed of unfolding events in eastern Ukraine by Russian intelligence agencies and regards the situation with "grave concern," Peskov said.
He added that Russia has been "deeply involved" in negotiations to secure the release of captured OSCE military observers and that the Ukrainian operation had made this "harder."
Pro-Russian activists have held the seven Western observers from the Organization for Security and Co-operation in Europe captive in Slavyansk for the past week.
Going forward, Peskov said Russia was using its influence to prevent further casualties and expected Western countries to do the same. "The West is quick to blame Russia, but it is now high time they condemn Kiev's actions," he said.
Russia's Foreign Ministry raised concern about the safety of a special presidential envoy, Vladimir Lukin, sent to southeastern Ukraine to negotiate a possible release of the OSCE observers.
Its statement also cited "reports about English-speaking foreigners spotted among attackers," saying there should be no "external interference" in Ukraine's affairs.
While Russia has claimed that the United States is directing events in Ukraine, Kiev and the West have repeatedly accused Russia of fomenting unrest and supporting the separatist groups.
Meanwhile, Russian airline Aeroflot said it was canceling flights Friday to the eastern cities of Kharkiv and Donetsk because it didn't have permission to enter Ukrainian airspace.
Human shield allegation
In his Facebook post, Avakov, the Ukrainian interior minister, said nine checkpoints that were under control of pro-Russian separatists in Slavyansk have been taken back by Ukrainian forces, who now encircle the town.
The operation is being conducted by the Interior Ministry, the national guard and the army, the Interior Minister said.
What the Ukrainian authorities want from the separatists has not changed, he said -- release the hostages, turn in weapons, vacate seized administrative buildings and allow the normal functioning of the city.
Avakov urged residents not to go outside and to be careful at windows while the operation continues. The separatists "shoot from the windows of residential apartments," he said, aware that the Ukrainian forces have been told not to fire toward homes.
Ukraine's security service also accused separatist leaders of ordering activists to use residents as human shields in the city and at checkpoints.
The service said the downing of a military helicopter indicated that those shooting were "highly professional foreign military, rather than peaceful residents with hunting guns, as the Russian leadership says."
A CNN team north of Slavyansk saw Ukrainian armored personnel carriers on the road, and heard the sound of two explosions that may have been rocket-propelled grenades.
A contingent of Ukrainian forces at a bridge on the outskirts of the city encountered a hostile crowd of locals who vowed not to let them pass. They were angered that an armored personnel carrier had injured an elderly man.
The local population's antipathy toward the authorities in Kiev will probably make the Ukrainian security forces' task harder as they seek to regain control.
Previous phases of the "anti-terror operation" by the Ukrainian forces have not resulted in any significant gains, despite some official claims of success.
On Thursday, pro-Russian activists and Ukrainian riot police clashed at the prosecutor's office in the eastern city of Donetsk as simmering tensions spiraled into violence.
At least one police officer was injured as the separatists seized control, the Ukrainian Interior Ministry said. The regional health authority said 26 people were injured, four of them with gunshot wounds.
Earlier in the day, crowds marched through Donetsk, demanding greater autonomy for the restive eastern region.
Some view the interim government in Kiev as a "junta" that seized power thanks to backing from ultranationalist groups, and they are angered by its actions.
Separatist leaders want to hold a referendum on May 11 on Ukraine becoming a federal state.
Eastern Ukraine was a heartland of support for pro-Moscow President Viktor Yanukovych, ousted in February after months of protests by people upset that he had turned away from Europe in favor of Moscow.
The interim government has said it'll look at constitutional reforms ahead of national elections due on May 25.
IMF approves $17.1 billion bailout
Acting Ukrainian President Oleksandr Turchynov acknowledged this week that the central government has effectively lost control of the country's Donetsk and Luhansk regions to the pro-Russian separatists.
He signed a decree introducing military conscription Thursday in a bid to beef up Ukraine's military, citing "real and potential threats to Ukraine."
Besides the threat from pro-Russian separatists, NATO estimates that Russia has some 40,000 troops massed near Ukraine's border.
In a key sign of international support for the Kiev authorities, the International Monetary Fund approved a $17.1 billion bailout for Ukraine on Thursday.
Russia annexed Ukraine's southeastern Crimea region in March after a controversial referendum. Its actions have prompted fears that it may seek also to intervene directly in eastern Ukraine, which has a large Russian-speaking population.
CNN's Nick Paton Walsh reported from Slavyansk and Victoria Butenko from Kiev, while Laura Smith-Spark wrote and reported from London and Michael Martinez from Los Angeles. CNN's Arwa Damon in Donetsk, Claudia Rebaza in Kiev, and Matthew Chance and Alla Eshchenko in Moscow contributed to this report. CNN's Elise Labott, Richard Roth, Boriana Milanova and Yon Pomrenze also contributed.