A new round of EU sanctions against Russia and pro-Moscow separatists in Ukraine was "looking very possible", a diplomatic source said Tuesday on the eve of an EU summit where leaders would make the final decision.

According to the source, member states were preparing a variety of new measures, including freezing programmes in Russia run by the EU's European Investment Bank and the London-based European Bank of Reconstruction and Development.

The Ukrainian military said Tuesday it had rescued four crew members of a transport plane shot down over rebel territory, while two more were being held by insurgents and another two still missing.

"Four of the eight crew members of the AN-26 plane were found and brought to a safe area after a search-and-rescue mission," the Ukrainian military said in a statement after Monday's incident.

Ukraine's Western-backed leaders on Tuesday invited pro-Kremlin insurgents to a video-conference aimed at halting spiraling violence and what Kiev has warned was an imminent invasion by thousands of Russian troops.

Kiev sharply raised the stakes in Europe's most explosive crisis in decades by declaring on Monday that a Ukrainian transport plane downed in the eastern conflict zone had been hit by a rocket fired from the Russian side of the frontier between the two ex-Soviet states.

Ukraine, Russia, Germany and France called for fresh ceasefire talks on east Ukraine by Tuesday at the latest, Berlin's chief diplomat said, as nerves started to fray in the volatile region.

Germany's Foreign Minister Frank-Walter Steinmeier held phone talks with his French counterpart Laurent Fabius, Ukrainian Foreign Minister Pavlo Klimkin and Kremlin chief of staff Sergei Ivanov, according to a Berlin statement on Monday.

The Kremlin denied on Monday a report that Moscow was considering targeted strikes against Ukraine after shells landed across the border and killed a Russian civilian.

Respected daily Kommersant had quoted a source close to the Kremlin as saying Moscow was considering "targeted retaliatory strikes" against Ukraine, where clashes between pro-Moscow rebels and government troops escalated over the weekend.

Ukrainian forces hunted for the crew of a downed military plane Monday after Kiev said the aircraft was "likely" shot down from Russia, ratcheting up tensions along their volatile border.

"Crew members from an AN-26 plane... that was shot down have established contact with the general staff," said a statement on the Ukrainian presidency website, without giving further details on the whereabouts of the eight people on board.

Former Ukraine president Viktor Yanukovych, ousted by pro-Western protests, has filed a suit with EU's top court against sanctions Brussels has imposed on him and two sons.

The European Court of Justice lists the Yanukovych suit along with cases made by several other prominent figures in the crisis, which was sparked when the former president ditched an EU Association Accord under intense pressure from Russia in November and eventually led to his ouster and the installment of a pro-Western team in Kiev.

Ukrainian troops claimed fresh gains Monday around one of the main remaining separatist strongholds as Moscow reportedly weighed up "targeted" cross-border strikes following the alleged deadly shelling of a Russian town.  

Ukraine's Western-backed President Petro Poroshenko said government forces had managed to break through a blockade by pro-Moscow rebels to reach soldiers camped out at the strategic airport in the insurgent-held bastion of Lugansk. 

Russian President Vladimir Putin and German Chancellor Angela Merkel agreed in talks in Brazil on Sunday that the situation in Ukraine, where Kiev is continuing an offensive against pro-Russian separatists in the east, is "deteriorating," the Kremlin said.

"Putin and Merkel had a constructive, very thorough dialogue during which they discussed in detail possible options for resolving the situation in Ukraine," Kremlin spokesman Dmitri Peskov told the Russian news agency Ria Novosti. "The two leaders agreed that unfortunately the situation is deteriorating."

Escalating clashes between pro-Kremlin separatists and Ukrainian forces on Sunday killed 12 civilians and forced the new Western-backed leader to cancel a pivotal meeting with Russian President Vladimir Putin at the World Cup in Brazil.

An explosive security crisis on the eastern edge of the European Union that has claimed more than 550 lives and inflamed East-West relations has since Friday threatened to spiral into an all-out civil war.