* Convoy had entered Ukraine without government's permission
* Western states demanded withdrawal of "illegal" convoy
* NATO, White House say Russian artillery used inside
* Germany's Merkel due in Kiev later on Saturday
* Shelling destroys homes in rebel-held city of Donetsk
(Updates with Ukraine president, more shelling)
By Dmitry Madorsky
DONETSK-IZVARINO BORDER CROSSING, Russia, Aug 23 (Reuters) -
T rucks from a Russian aid convoy started crossing back into
Russia on Saturday after igniting a storm of anger in Western
capitals a day earlier by driving into Ukraine without the
permission of the government in Kiev.
The return of the trucks may help ease the tension to some
extent in time for the arrival of German Chancellor Angela
Merkel in the Ukrainian capital later on Saturday for talks on
how to end the crisis over Ukraine.
Western leaders had joined Kiev in calling the Russian
convoy -- about 220 white-painted trucks loaded with tinned food
and bottle water -- an illegal incursion onto Ukraine's soil,
and demanded that they be withdrawn as soon as possible.
A Reuters journalist at the Donetsk-Izvarino border
crossing, where the convoy rolled into Ukraine on Friday, said
over 100 trucks had passed back into Russia and more could be
seen in the distance arriving at the crossing.
Russian state television had earlier broadcast footage of
some of the trucks being unloaded at a distribution depot in the
city of Luhansk, eastern Ukraine.
The city is held by separatist rebels who are encircled by
Ukrainian government forces, and has been cut off from power and
water supplies for weeks. International aid agencies have warned
of a humanitarian crisis.
NATO said it had evidence that Russian troops had been
firing artillery at Kiev's forces inside Ukraine - fuelling
Western allegations that the Kremlin is behind the conflict in
an effort undermine the Western-leaning leadership in Kiev.
The White House made the same allegation. "We have seen the
use of Russian artillery in Ukraine in the past days," said U.S.
deputy national security advisor Ben Rhodes.
Russia denies giving any material help to the rebellion in
eastern Ukraine, a mainly Russian-speaking region. It accuses
Kiev, with the backing of the West, of waging a war against
The conflict in Ukraine has dragged Russian-Western
relations to their lowest ebb since the Cold War and sparked a
round of trade sanctions that are hurting already-fragile
economies in European and Russia.
In the rebels biggest strong hold, the city of Donetsk,
there was unusually intense shelling on Saturday. That may be
part of a drive by government forces to achieve a breakthrough
in time for Ukrainian Independence Day, which falls on Sunday.
The crisis over Ukraine started when mass protests in Kiev
ousted a president who was close to Moscow, and instead
installed leaders viewed with suspicion by the Kremlin.
Soon after that, Russia annexed the Ukrainian region of
Crimea, and a separatist rebellion broke out in eastern Ukraine.
In the past weeks, the momentum has shifted towards Ukraine's
forces, who have been pushing back the rebels.
The separatist are now encircled in their two strongholds,
Luhansk and Donetsk.
Reuters reporters in the city of Donetsk said that most of
the shelling was taking place in the outskirts, but explosions
were also audible in the centre of the city.
In Donetsk's Leninsky district, a man who gave his name as
Grigory, said he was in the toilet on Saturday morning when he
heard the whistling sound of incoming artillery. "Then it hit. I
came out and half the building was gone."
The roof of the building had collapsed into a heap of
debris. Grigory said his 27-year-old daughter was taken to
hospital with injuries to her head. He picked up a picture of a
baby from the rubble. "This is my grand son," he said.
In another residential area, about 5 km north of the city
centre, a shop and several houses had been hit. Residents said
two men, civilians, were killed.
Praskoviya Grigoreva, 84, pointed to two puddles of blood on
the pavement near a bus stop that was destroyed in the same
attack. "He's dead. Death took him on this spot," she said.
In the Ukrainian capital, preparations were under way for
Independence Day celebrations, twenty-three years after the
collapse of the Russian-dominated Soviet Union. The day, which
will include a military parade, has taken on added meaning for
Ukrainians because of the fighting in the east.
"We are a peaceful people. But we are ready to pay, and we
are paying in blood and sweat, for the right to live under this
flag, under this sky and among these fields," Ukrainian
President Petro Poroshenko said at a ceremony.
Many Ukrainians were buoyed this week when the spire of a
landmark Moscow skyscraper was painted, clandestinely, in the
blue-and-yellow of the Ukrainian flag.
A Ukrainian extreme sportsman said he had done it as a
patriotic piece of performance art.
In Donetsk city centre, the separatist administration had
set up an exhibition of captured Ukrainian military hardware.
They planned to display it in their own festivities on Sunday
intended as a counterpoint to the celebrations in Kiev.
(Additional reporting by Maria Tsvetkova and Tom Grove in
Donetsk, Ukraine and Vladimir Soldatkin in Moscow; Writing by
Christian Lowe; Editing by Ralph Boulton)