LUHANSK, Ukraine (Reuters) - Ukraine will not prosecute pro-Russian separatists who seized government buildings if they surrender their weapons and disperse, the country's president said on Thursday, in a bid to ease a crisis that stoked fears of the country's break-up.
But the armed men, who strengthened barricades around the buildings with barbed wire and sandbags overnight, said they would not leave unless the government also agreed to hold a referendum to boost the regions' independence.
Tensions have risen in the mainly Russian-speaking east since the overthrow of Ukraine's Moscow-backed president and the installation of a new pro-European government, which says the occupations are part of a Russian-led plan to dismember the country.
The interior minister on Wednesday said he expected the situation to be brought under control within 48 hours, with force if necessary.
But Acting President Oleksandr Turchynov struck a softer tone on Thursday, saying he hoped to avoid bloodshed.
"We need to resolve this situation with the minimum number of victims," Turchynov told parliament.
Under his proposal, protesters holding buildings in Luhansk and Donetsk would not be prosecuted if they left the building and surrendered their weapons.
The seizure of government buildings in February gave separatists control of the Crimea region and led weeks later to its annexation by Russia.
An armed storming of the two buildings could provoke a strong response from Moscow, which has reserved the right to send troops in to protect Russian speakers.
While some of the activists say they only want their regions to have more independence without leaving Ukraine, others have described the referendum as a step on the way to union with Russia.
DEMANDS NOT MET
Activists at both buildings said they would continue talks with the government, but said the current offer was not enough.
"They offered amnesty, but there is no movement on a referendum for federalisation," said Alexander Gureyev, one of the activists barricaded into the five-storey former KGB headquarters in Luhansk.
"We are not going to accept an amnesty without a referendum."
Around 250 protesters, some waving Russian flags, braved cold rain outside the building to show their support.
Activists armed with automatic rifles, pistols and knives kept guard on the building, pushing bookshelves against the windows so no one could see inside. One protester put their arsenal at around 200-300 rifles.
A larger crowd of around 1,500 people surrounded the seized regional government building in Donetsk, where activists also rejected the president's offer.
U.S. Secretary of State John Kerry accused Russian agents and special forces on Tuesday of stirring up separatist unrest.
Russia denied the accusations on Wednesday and dismissed concerns over a troop build-up near the border with Ukraine in what has become the worst East-West crisis since the end of the Cold War in 1991.
(Additional reporting by Natalia Zinets in Kiev and; Editing by Richard Balmforth and Will Waterman)