By Richard Balmforth
KIEV, Aug (Reuters) - Ukrainian forces fought street battles with separatist rebels in the eastern town of Ilovaisk overnight into Wednesday as they sought to isolate rebel strongholds near the Russian border, an Interior Ministry official said.
Nine pro-Ukrainian volunteer fighters, supporting Kiev's forces, were killed in the fighting in Ilovaisk, which lies part way along the road from Donetsk, the region's main hub, and the border with Russia, the official, Anton Gerashchenko, said.
Separately, health authorities said 34 civilians had been killed as a result of fighting in the 24 hours up to noon Wednesday in the wider Donetsk region, one of two big provinces of Ukraine's industrial east.
Local authorities in the big eastern city of Luhansk said the city rocked with the crash of artillery fire and heavy automatic fire on Wednesday as government forces kept up an assault on rebels who have occupied key buildings there since April, when the separatist rebellions erupted.
Luhansk has been largely cut off for weeks and is without water and regular supplies of electricity which have hit mobile and landline phone connections. Only vital foodstuffs are on sale while long queues form for bread being distributed from touring vans.
"The humanitarian crisis is critical. Since there's no electricity, people are now cooking meals outside in their yards on open fires," Oleksander Sabenko, a municipal official, told the Ukrainian news channel 112.ua.
As well as worsening conditions for the people on the ground, Prime Minister Arseny Yatseniuk said the fighting was draining the potential of the economy by the day, with attacks damaging mines, power stations, rail lines and bridges.
"Russia is aware that rebuilding the Donbass (the industrial east) will cost not millions but billions of hryvnia," he said.
Nonetheless, government forces are gaining the upper hand after fighting for four months to quell rebellions in its Russian-speaking east and are steadily tightening the squeeze on rebels in their two big bastions of Donetsk and Luhansk.
The pro-Western government in Kiev and its allies in the West have accused Moscow of orchestrating the rebellions and arming the separatists with tanks, missiles and other heavy weaponry.
Moscow denies this. But this has not stopped the conflict, which has taken a heavy human toll, dragging relations between Russia and the West to their worst level since the end of the Cold War.
The United Nations says an estimated 2,086 people, including civilians and combatants, have been killed in the four-month conflict. That figure nearly doubled since the end of July, when Ukrainian forces stepped up their offensive and fighting started in urban areas.
Gerashchenko, on his Facebook page, said rebel forces in Ilovaisk had called up reinforcements after coming under pressure from pro-Ukrainian volunteer fighters from the so-called Donbass battalion.
"Street battles continued throughout the night. It's the most complicated type of close combat," he said.
"The enemy can come up to you from wherever he wants and shoot from an attic, a basement or from a children's nursery," he said, saying that nine members of the battalion had been killed. (Editing by Alison Williams)