Russian-backed separatists in eastern Ukraine and Ukrainian forces accused each other of unprovoked shelling on Thursday.
NATO has warned that Moscow is looking to create a pretext for an invasion of Ukraine as Russia-backed separatists in the Donbas region and the Ukrainian army exchanged fire on Thursday.
Jens Stoltenberg, secretary-general of NATO, told Euronews that Russia could stage a 'false-flag operation' in order to justify an incursion over the border where Moscow has stationed tens of thousands of soldiers.
It came as separatists in the Donbas region accused the Ukrainian army of shelling their positions, while Kyiv claimed that their soldiers had been attacked.
"I'm worried about the increased number of violations of the ceasefire," Stoltenberg told Euronews.
"I'm also worried for the possibility that Russia is trying to create some kind of pretext, whether it is [this shelling attack] or not, I'm not able to tell that.
"But we have seen attempts by Russia to [...] stage an event and then use that as an excuse for launching an attack on Ukraine. And of course, that adds to the seriousness of the situation."
The Kremlin has repeatedly insisted that it has no plans to invade Ukraine.
Separatist official Rodion Miroshnik in the Luhansk region of eastern Ukraine said there had been a “large-scale provocation" by the Ukrainian army, and that they had returned fire.
Ukraine disputed the claim, saying separatists had shelled its forces but they didn’t fire back.
The Ukrainian military command said shells hit a kindergarten building in Stanytsia Luhanska, wounding two civilians and cutting off the power supply to half of the town.
An observer mission of the Organization for Security and Cooperation in Europe (OSCE) is expected to offer its assessment of the situation later on Thursday.
US Defense Secretary Lloyd Austin has meanwhile described as "troubling" reports of mutual accusations of bombing from Ukrainian forces and Russian-backed separatists in eastern Ukraine.
Austin said that Washington and its allies "are still gathering the details, but we've said for some time that the Russians might do something like this in order to justify a military conflict, so we'll be watching this very closely".
Britain's top diplomat, Liz Truss, said such reports "are a blatant attempt by the Russian government to fabricate pretexts for invasion", describing it as a "disinformation campaign".
Her armed forces minister, James Heappey, also accused Moscow of "disinformation" over its claim it is withdrawing troops for the border and in Crimea.
Moscow has stationed about 150,000 troops along its shared border with Ukraine and in neighbouring Belarus, where it is officially conducting joint military exercises until 20 January. It has also deployed several warships to the Black Sea.
Stoltenberg stressed that Russia has “enough troops, enough capabilities, to launch a full-fledged invasion of Ukraine with very little or no warning time", adding that “the fact that you’re putting a battle tank on a train and moving it in some direction doesn’t prove a withdrawal of troops”.
The Kremlin denies any intention to invade but has demanded assurances that Ukraine and Georgia will never be allowed to join NATO. It also wants some allied troops and weapons to be withdrawn from several eastern European countries. It argues these are a threat to its own security.
While the US and its allies have rejected Moscow's demands to bar membership to Ukraine, they offered to engage in talks with Russia on limiting missile deployments in Europe, restrictions on military drills and other confidence-building measures.
Russian President Vladimir Putin said that Moscow had offered to discuss those issues years ago, but the West only agreed to talk about them now. He said that Russia was ready to talk about them now, but only in conjunction with its main security demands.
Russia's Foreign Minister Sergey Lavrov said that Moscow was sending its formal reply on those issues to the US and NATO later on Thursday and will make it public.