DONETSK Ukraine (Reuters) - Prolonged artillery shelling rocked residential apartment blocks on Wednesday in Donetsk, casting doubts over renewed talk of a ceasefire and an end to Ukraine's six-month-old conflict.

Earlier, Russian President Vladimir Putin said he and his Ukrainian counterpart Petro Poroshenko were "very close" in their views on how to end the fighting between Ukrainian government forces and pro-Russian separatists and a peace deal could be reached this week.

But in Donetsk, eastern Ukraine's largest city with a pre-war population of about one million, the separatists who have made it the capital of their self-proclaimed "people's republic" were skeptical about the latest peace drive.

"A ceasefire is always good but our main condition still stands - the withdrawal of Ukrainian troops from our territory. That's the only reasonable way," said Vladimir Antyufeyev, deputy prime minister of the "Donetsk People's Republic".

A leader of one of the armed rebel units, who declined to give his name, said the separatists would agree to nothing less than full independence from Kiev.

"Three months ago they might have offered us autonomy. But we have made our stand now, we have taken everything for ourselves. There is no going back," he said, sitting in a cafe in the city center where distant shelling could be heard.

The center of Donetsk, a major industrial city, has seen little shelling in recent days as the separatists - backed, says Kiev, by Russian troops - launched a new offensive further south.

But fighting raged on Wednesday on the northern and western outskirts, around Donetsk's airport - still in the hands of government forces - and some surrounding villages.

The sound of the shelling prompted residents in one north-western district of Donetsk to seek shelter in the dark and humid cellar of an office building.


"INHUMAN"

"The conditions here are inhuman but we will live on bread and water for a year if that is what it takes to get rid of Kiev," said Tatiana, 55, a post office worker, sitting on a bed in the shelter where some 50 people spend the nights.

"Poroshenko should come live with us with his children to try for himself some of what he is giving us," she said.

Not everybody blamed Poroshenko for conditions in Donetsk, which like most of eastern Ukraine is mainly Russian-speaking, has close economic and other ties to nearby Russia and is distrustful of the government in distant Kiev.

"I would leave the city but I am a pensioner, I have no money and all my wealth is my flat, which is here," said Lidia, 75. "No government should have allowed such bloodshed, that goes for Kiev and the Donetsk People's Republic too," she said as she saw off a neighbor on a bus leaving for Kiev.

Elsewhere, several small mortars hit free-standing houses, shattering window panes and damaging gates with shrapnel.

"A friend called me to go dine with him and that's why I was not working in my garden when it was hit," said the owner of one of the homes. "It's getting impossible to live here."

Fighting has left Donetsk largely deserted, with many shops and restaurants shut. The few petrol stations still open mainly offer diesel because most have run out of petrol and gas deliveries stopped long ago.

"They told us there would be no gas deliveries for as long as the fighting goes on. We still have petrol left for a month or so but have not had any fresh deliveries lately," said Ruslan, who works at one petrol station in central Donetsk.

Kiev and the West accuse Moscow of supporting and arming the rebels and of organizing incursions by regular Russian troops into Ukraine's territory, reversing an offensive by Kiev's forces who had previously been retaking ground from the rebels. Russia denies it has any military presence in Ukraine.

The United Nations says the armed conflict has already cost more than 2,600 lives.


(Editing by Gareth Jones and Ruth Pitchford)