Ukraine peace plan in tatters, 'frozen conflict' takes shape

Separatist leader Alexander Zakharchenko walks as he attends the inauguration ceremony at a theatre in Donetsk, eastern Ukraine, November 4, 2014. REUTERS/Maxim Zmeyev

KIEV/DONETSK Ukraine (Reuters) - Kiev said on Wednesday it would halt payment of state funds in areas controlled by pro-Moscow rebels, as both sides hardened positions in what is rapidly becoming a "frozen conflict": a long-term stalemate that the West believes is Russia's aim.

A day after the rebels held inauguration ceremonies for their leaders, the separatists and the central government each accused each other of violating a September peace deal and signalled they would withdraw support for some of its terms.