Russia's paramilitary Wagner Group claims it has taken control of the strategic town of Soledar in Ukraine after a fierce battle.
The Ukrainian government said that its forces are holding strong in the salt mining town to the north-east of Bakhmut.
“Wagner units took control of the entire territory of Soledar,” the mercenary group's head, Yevgeny Prigozhin, said late on Tuesday, according to Russian news agencies.
Fighting is continuing in the town centre, where Ukrainian forces are surrounded, he said.
Kyiv denied the claims. “Soledar was, is and will be, Ukrainian,” its army said.
Mr Prigozhin, an ally of Russian President Vladimir Putin, also claimed that only Wagner fighters, who are not part of the Russian Army, took part in “the storming”.
On Wednesday, however, the Kremlin said it was important “not to rush” into declaring victory in the town.
“Let's not rush. Let's wait for official announcements,” spokesman Dmitry Peskov said.
The army later said the battle was continuing and advances have come at “quite a high price”.
Control of the mining town in Donetsk would allow Russian forces to advance on Bakhmut, where fighting has been “house to house”.
Russia would also be able to make use of Soledar's extensive network of salt mine tunnels — the largest in Europe — to advance into Ukrainian-controlled territory.
On Tuesday, the UK's Ministry of Defence said Wagner paramilitaries had made advances into Soledar and were most likely to be in control of the settlement, which was home to about 10,000 people when conflict began in February.
Ukraine said that its troops are holding.
“Our fighters are bravely holding the defence,” said deputy defence minister Hanna Maliar, who claimed the battlefield was “strewn” with Russian corpses.
Analysts on both sides of the conflict said the situation is fluid and fighting intense, with the Bakhmut area considered to be the most dangerous theatre of war in the country.
There is “almost no life left” in the Bakhmut and the Soledar region, Ukrainian President Volodymyr Zelenskyy said on Monday, claiming Russia was intensifying its attacks and “scarring the land” with strikes.
“This is what madness looks like,” he said.
Two British volunteers are missing after departing for the embattled town, the UK Foreign Office said.
Andrew Bagshaw and Christopher Parry left the city of Kramatorsk for Soledar on Friday and were reported missing on Saturday evening.
Mr Parry's family said he had been helping to evacuate elderly civilians from areas on the front line.
