Street battles seen in Ukraine today were neighbor vs. neighbor as the country appeared to inch closer to an all-out regional war and as Russia announced that hopes for a peace deal were dead.

Exclusive video: Invading "would be making a big mistake" for Putin.

Ukraine troops, chanting their battle cry, struck hard today against the pro-Russian groups that have taken over the east as well as the south. In the city of Odessa today, there were explosions, tear gas, petrol bombs and stun grenades.

On one side, there are those who want the country to stay united. On the other, those want to separate and be supported by Russia.

The fighting between Ukraine's forces and pro-Russian militants attempting to take over sparked a fire in Odessa, at the separatists' headquarters, killing at least 35. Weapons and the wounded littered the streets.

The pro-Russian mobs have hit right back: City after city has fallen like dominoes to the gangs.

They took down two helicopters today and stopped an armored carrier from advancing - just a day after they took over yet another government building.

Watch: Pro-Russian militants shoot down two Ukrainian helicopters.

President Obama today met with Germany's chancellor, Angela Merkel, taking yet another shot at Russian leader Vladimir Putin.

"He cannot dictate the economic policies or foreign policies of a sovereign country," Obama said. "That's not acceptable."

But on the streets of Ukraine, anger was aimed at the U.S. as well as Ukrainian leaders in Kiev.

Many in eastern Ukraine said they get treated with open disdain by their fellow countrymen to the west because the vast majority of them traced their ancestry to Russia.

Again and again, they accused western Ukrainians of being fascists backed by the U.S.

No one told ABC News they wanted to be absorbed by Russia; they said they no longer wished to be part of Ukraine. The said they wanted to be autonomous, independent republics.

Ukraine's acting president, Oleksandr V. Turchynov, recently said his country's forces were " helpless" as Russia continued to gain ground in dozens of key cities.

Fear has spread across the region, prompting hundreds of American troops to be sent for joint training in Latvia, Lithuania and Estonia, where there are fears of a Russian invasion.

Sergei Poliakov/AP Photo