BULAVYNE, Ukraine: Government forces pulled out of an encircled town in eastern Ukraine on Wednesday after a fierce assault by Russian-backed separatists which Kiev and Europe said violated a crumbling cease-fire.

President Petro Poroshenko said more than 80 percent of his troops had left the rail hub following a heavy bombardment and street-by-street battles which he said showed “the true face of the bandits and separatists who are supported by Russia.”

The rebels say the cease-fire, negotiated by Ukraine, Russia, Germany and France at a summit in Belarus last week, does not apply to Debaltseve, which links the two rebel-controlled regions of eastern Ukraine, Donetsk and Luhansk.

Poroshenko and the West say the rebel assault is being reinforced by Russian tanks, artillery and soldiers, though Moscow denies sending forces to join the battle for a region that President Vladimir Putin has called “New Russia.”

“The actions by the Russia-backed separatists in Debaltseve are a clear violation of the cease-fire,” European Union foreign policy chief Federica Mogherini said in Brussels, stepping up Western criticism of the rebel offensive on Debaltseve.

“The EU stands ready to take appropriate action in case the fighting and other negative developments in violation of the Minsk agreements continue,” she said, making an apparent threat of further economic sanctions on Moscow.

Canada imposed sanctions on Russia over its conduct in Ukraine on Tuesday, a move Moscow said would fuel further tension in Ukraine and prevent the implementation of the cease-fire.

There was little hope when the deal was signed last Thursday in the Belarussian capital Minsk by the rebels, Ukraine, Russia and the OSCE security watchdog that it would hold for long, but its seeming swift collapse has surprised many.

NATO Secretary-General Jens Stoltenberg voiced deep concern about the deteriorating situation in and around Debaltseve, saying: “The refusal of the separatists to respect the cease-fire threatens the agreement.”

Britain Foreign Secretary Philip Hammond said Europe should at least extend its sanctions against Moscow if the cease-fire broke down.

A German government spokesman said the Minsk agreement had been damaged though it made sense to try to implement it.

Putin showed no sign of backing down over Ukraine on Tuesday evening, when he urged Kiev’s pro-Western leaders to let their soldiers surrender to avoid more bloodshed.

Even before the Ukrainian troops were forced to pull back, last week’s peace deal had all but collapsed, with both sides failing to withdraw heavy guns as required after the rebels refused to halt their advance.