LUHANSK, Ukraine -- Protesters demanding more power for Ukraine's regions stormed the government building in Luhansk with baseball bats Tuesday, seizing control of a key site in one of the largest cities in Ukraine's troubled east.
The move further raises tensions in the east, where insurgents have seized city halls, police stations and other government buildings in at least 10 cities and towns.
The demonstrators who overran the building are seeking - at the very least - a referendum on granting greater authority to Ukraine's regions. Eastern Ukraine, which has a large Russian-speaking population, was the heartland of support for Viktor Yanukovych, the president who fled to Russia in February. The government that replaced him in Kiev has resisted those demands so far, fearing they could lead to a breakup of the country or mean that more regions - like Crimea - are annexed by Russia.
The storming came as 1,000 demonstrators gathered in front of the building. About 150 people, some masked and wielding baseball bats, broke out of the crowd and charged into the building, meeting without resistance. Later protesters formed a corridor for police who had been inside the building to leave.
Luhansk, a city of about 450,000, is just 15 miles west of the border with Russia.
Regional autonomy is a core issue in the unrest in eastern Ukraine, where insurgents fear the government that took power after Yanukovych will suppress the region's Russian-speakers.
In Kiev, Ukraine's parliament on Tuesday discussed the possibility of holding a national referendum on whether the country should remain united or become a loose federation that allows the regions more powers. However, no consensus was reached on how such a referendum would be phrased or when it could be held.
Ukraine is already holding a new presidential election on May 25.
Yulia Tymoshenko, a former prime minister who is running for president and whose party dominates the new government, spoke out Tuesday against excessive decentralization.
"While we are giving authority to local administrative bodies, we are obliged - under any circumstances - not to lose authority over the country," Tymoshenko told lawmakers. She asked them to allow local self-governance "but not to lose the possibility of building a whole, unified, governable country, a country that is moving ahead under a strategy determined by all the elites and the people."
Russia has massed tens of thousands of troops in areas near the Ukrainian border, feeding concerns that Moscow aims to use unrest in the east as a pretext for an invasion.
In Kiev, Deputy Foreign Minister Danylo Lubkivsky again accused Russia of fomenting the unrest in Ukraine and said the insurgents it was supporting were violating an international agreement on overcoming the crisis in Ukraine.
"The east, though, still remains a trouble spot, with civilians being threatened and attacked. Russian terrorists are refusing to surrender arms," he told reporters. "They have no real political agenda. They have no political goals and they have no intention of holding any dialogue. They simply execute orders from Russian authorities."
Speaking after a meeting with Lamberto Zannier, chief of the Organization for Security and Cooperation in Europe, Lubkivsky called on the pro-Russia forces to release the hostages they are holding, including a group of OSCE military observers.
Zannier called for the restoration of order throughout Ukraine.
On Sunday, Pro-Russian militants in camouflage fatigues and black balaclavas paraded captive European military observers before the media and showed three captured Ukrainian security guards bloodied, blindfolded and stripped of their trousers and shoes, their arms bound with packing tape.
The eight European military observers were taken prisoner by pro-Russian separatists on Friday near the town of Slavyansk. CBS News correspondent Holly Williams was there on Sunday when they were paraded in front of the international media. Williams reported that the eight captives said they were being treated well -- but it was impossible to tell if they were under duress.
sanctions on Russia to deter its aggressive moves toward Ukraine are taking an economic toll.
"You have to look over the period of time Russia went into Crimea, since we've imposed sanctions, there has been a quite substantial deterioration in Russia's already weak economy," Lew said. "We see it in their stock exchange, we see it in their exchange rate, we see it in a number of important economic indicators."
Lew told a House panel the United States and its allies remain unified in imposing costs on Russia and said additional penalties announced Monday will have an impact. He said the goal was clear - forcing Russia to pursue a diplomatic solution.
The West has pursued penalties since Russia annexed the Crimean Peninsula, and in response to violence in Ukraine involving pro-Russian separatists.
Lew said the United States is prepared to take additional steps if Russia doesn't change its ways. He defended the penalties against some Republican and Democratic critics in Congress and insisted there has been a substantial deterioration in the Russian economy.