Ukraine On Full Combat Alert Over 'Invasion'

Ukraine's military is "on full combat alert" over a possible invasion by Russian troops massed on the border, Kiev's acting leader has said.

Interim president Oleksandr Turchynov told a ministerial meeting: "Our armed forces are on full combat alert. The threat of Russia starting a war against mainland Ukraine is real."

Ukraine's government later announced the country's armed forces would hold military exercises in central Kiev on Wednesday night.

The Russian Foreign Ministry responded by demanding Ukraine halt such "militaristic statements".

Ukraine's acting president Oleksander Turchinov at the cabinet meeting

"We insist that Kiev immediately ceases the bellicose rhetoric, which is aimed at intimidating its own population," the ministry said.

The increasing tension came as Downing Street confirmed that David Cameron had spoken to Russian President Vladimir Putin on Wednesday.

A statement from the Kremlin said the two leaders agreed that the crisis could only be solved through "peaceful means".

Russia has denied it has any plans to invade eastern Ukraine after its annexation of the Crimean peninsula in March.

Kiev, however, has accused Moscow of orchestrating an armed uprising in the industrial east by Russian-speaking separatists, who have seized government buildings in a number of towns and cities.

Ukraine's army and police appear to be making little progress in a high-profile operation to prevent the rebels expanding their grip over towns in the east.

It came as the International Monetary Fund said Russia was already in recession, while citing the effect of the ongoing crisis on investment in the country.

IMF economist Antonio Spilimbergo was quoted by the Interfax news agency as saying: "If we define recession as negative growth in two quarters in a row, then Russia from that point of view is experiencing recession."

The IMF has lowered its 2014 growth forecast for Russia to 0.2% from the 1.3% figure it issued on April 8, Mr Spilimbergo added.

Russia deployed around 40,000 troops to its shared border with Ukraine in March. Moscow initially claimed they were sent for exercises but later said they were ready to respond to Kiev's military offensive against pro-Kremlin rebels.

President Putin insists he has a "right" to send his forces into Ukraine, but has not yet done so.

Kiev and the US say Russian special forces are already active in the insurgency in eastern Ukraine.

Mr  Turchynov told the cabinet meeting: "Our number one task is to prevent terrorism spreading from the Donetsk and Lugansk regions to other Ukrainian regions".

He underlined moves announced a day earlier to set up armed civilian "territorial volunteer militia" units to help beleaguered police and troops in the east.

In a separate development, Britain is to send a prosecutor to Ukraine to help local law enforcement authorities in the hunt for billions of pounds.

The money is believed to have been siphoned out of the country by ousted former president Viktor Yanukovych and his inner circle.

In America, 19 Republican senators introduced legislation on Wednesday proposing broader and tougher measures to punish Russia over the Ukraine crisis.

The measures included sanctions on major banks and energy companies, as well as $100m (£59m) in military aid for Kiev.

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