Ukraine: Two men lean on the smouldering wreckage of a Ukrainian airforce plane. They poke among the debris, looking for anything of value. Using an iron bar, one of them moves a Kalashnikov rifle to reveal what appears to be a charred human limb.

Nearby, another man stirs a pile of ashes covering a burnt body. "Leave him alone, his mother would not recognise him," someone says.

In this field near the Russian border, in the separatist stronghold of Lugansk, what is left of an AN-26 military transport plane lies scattered in pieces.

The plane was hit by a missile and crashed shortly after noon, according to residents from the nearby village of Davydo-Mykilske. The Ukrainian government said the shot likely came "from the territory of the Russian Federation".

"It made a U-turn near the border and then it was hit, caught fire and fell to the ground," Sergei told a team of AFP reporters as he surveyed the debris of the plane.

Sergei, like many other villagers, rushed to the crash site on motorcycles and bikes to see if they could collect parts from the wreckage.

Residents say that at least some of the crew were able to parachute from the plane before it crashed, but they did not know where they landed. They spoke of seeing three parachutes in the sky. According to a spokesman for the Ukrainian government, there were eight people aboard the plane, which is capable of carrying 40.

Following the crash, both the Ukrainian army and separatist forces sent teams looking for the surviving crew members. Defence officials in Kiev said they had made contact with at least two of those who had been on board, while rebels reportedly claimed they were holding four for interrogations.

The wreckage of the plane is split into two main pieces - the tail of the aircraft bearing a Ukrainian coat of arms, and 200 metres (yards) away, a wing with a piece of engine and a propellor attached.

Bottles of water are scattered everywhere, indicating that the plane might have been carrying supplies.

Ukrainian authorities said Monday afternoon that the transport aircraft had been flying too high to be hit by portable missile systems used by the rebels, meaning the shots had come "likely from the territory of the Russian Federation".

Tensions had already soared after a shell reportedly from the Ukrainian side killed a Russian civilian on Sunday.

The foreign ministry in Moscow warned that Kiev risked "irreversible consequences" and a report in respected daily Kommersant cited a source close to the Kremlin as saying Russia was weighing up "targeted retaliatory strikes" against Ukrainian positions.

Kiev denied any involvement in the incident and Moscow has rejected the report.

The downing of the aircraft - the latest since a military plane was shot down last month killing all 49 on board - came as Ukrainian forces claimed to be making gains around the key rebel stronghold of Lugansk.