TBILISI, Georgia (AP) -- Russian news agencies say the Defense Ministry is claiming to have sunk a Georgian missile boat that was trying to attack Russian navy ships in the Black Sea.
Russia's Defense Ministry refused to comment on the Sunday reports to The Associated Press and Georgian officials could not immediately be reached.
If confirmed, the incident could mark a serious escalation of the fighting between Russia and Georgia over the separatist Georgian province of South Ossetia.
"Georgian missile patrol boats today made two attempts to attack Russian military ships. The Russian ships opened fire in response and as a result, one of the Georgian ships carrying out the attack was sunk," the ITAR-Tass news agency quoted a ministry spokesman as saying.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
TBILISI, Georgia (AP) - Georgia called a cease-fire and said its troops were retreating Sunday from the disputed province of South Ossetia in the face of Russia's far superior firepower. Russia said the soldiers were "not withdrawing but regrouping" and refused to recognize a truce.
International envoys headed in to try to end the fighting between Russia and its small U.S.-allied neighbor that erupted last week in the Russian-backed separatist region.
The announcement of a retreat came after Russia expanded its bombing blitz Sunday - targeting the area around the Georgian capital's international airport. Russia also deployed a naval squadron off another of Georgia's separatist regions, Abkhazia, and according to Georgia landed thousands of troops.
President Mikhail Saakashvili ordered a unilateral cease-fire, the Foreign Ministry said, and the country's security council head said troops had left South Ossetia. Russia, however, insisted Georgian soldiers remained around the regional capital, Tskhinvali, where the fighting has been the most brutal. Tskhinvali is located close to the border between the breakaway region and the rest of Georgia.
Georgia, whose troops have been trained by American soldiers, began an offensive to regain control over South Ossetia overnight Friday, launching heavy rocket and artillery fire and air strikes that pounded Tskhinvali.
In response, Russia launched overwhelming artillery shelling and air attacks on Georgian troops. On Sunday, Russian jets targeted an aircraft-making plant near the airport on the outskirts of Tbilisi, the capital of the former Soviet republic.
Thousands of civilians have fled South Ossetia - many seeking shelter in the Russian province of North Ossetia.
"The Georgians burned all of our homes," said one elderly woman, as she sat on a bench under a tree with three other white-haired survivors of the fighting.
She seemed confused by the conflict. "The Georgians say it is their land," she said. "Where is our land, then? We don't know."
The scope of Russia's military response has the Bush administration deeply worried.
"We have made it clear to the Russians that if the disproportionate and dangerous escalation on the Russian side continues, that this will have a significant long-term impact on U.S.-Russian relations," U.S. deputy national security adviser Jim Jeffrey told reporters.
The U.S. military began flying 2,000 Georgian troops home from Iraq after Georgia recalled them, even while calling for a truce.
"Georgia expresses its readiness to immediately start negotiations with the Russian Federation on a cease-fire and termination of hostilities," the Georgian Foreign Ministry said in a statement, adding that it had notified Russia's envoy to Tbilisi.
But Russia insisted Georgian troops were continuing their attacks.
Alexander Darchiev, Russia's charge d'affairs in Washington, said Georgian soldiers were "not withdrawing but regrouping, including heavy armor and increased attacks on Tskhinvali."
"Mass mobilization is still under way," he told CNN's "Late Edition."
The U.N. Security Council - where Russia has a veto - began talks Sunday for the fourth time in four days to try to resolve the situation.
Russia's Deputy Foreign Minister Grigory Karasin said more than 2,000 people had been killed in South Ossetia since Friday, most of them Ossetians with Russian passports. The figures could not be independently confirmed.
The respected Russian radio station Ekho Moskvy reported that two journalists were killed by South Ossetian separatists, citing a correspondent of Russian Newsweek magazine.
Georgia borders the Black Sea between Turkey and Russia and was ruled by Moscow for most of the two centuries preceding the 1991 breakup of the Soviet Union. Both South Ossetia and Abkhazia have run their own affairs without international recognition since fighting to split from Georgia in the early 1990s.
Both separatist provinces have close ties with Moscow, while Georgia has deeply angered Russia by wanting to join NATO.
Georgia's Security Council chief Alexander Lomaia said the Georgian troops had to move out of South Ossetia because of heavy Russian shelling. "Russia further escalated its aggression overnight, using weapons on unprecedented scale," Lomaia said.
French Foreign Minister Bernard Kouchner called the hostilities in South Ossetia "massacres," hours before he and Finnish counterpart Alexander Stubb were scheduled to travel to Tbilisi for a meeting with Saakashvili.
Kouchner said he would deliver a "message of peace" to Georgia and Russia, and call on both countries "to stop the fighting immediately."
Russian Prime Minister Vladimir Putin, meeting Saturday with South Ossetia refugees who had fled across the border to the Russian city of Vladikavkaz, described Georgia's actions as "complete genocide." Putin also said Georgia had lost the right to rule the breakaway province - an indication Moscow could be ready to absorb the province.
President Bush has called for an end to the Russian bombings and an immediate halt to the fighting, accusing Russia of using the issue to bomb other regions in Georgia.
Russian jets raided several Georgian air bases and bombed the Black Sea port city of Poti, which has a sizable oil shipment facility. The Russian warplanes also struck near the Baku-Tbilisi-Ceyhan oil pipeline which carries Caspian crude to the West.
Russian officials said they were targeting Georgian communications and lines of supply. But a Russian raid Saturday on Gori near South Ossetia, which apparently targeted a military base on the town's outskirts, also killed many civilians.
Tskhinvali residents who survived the Georgian bombardment overnight Friday by hiding in basements and later fled the city estimated that hundreds of civilians had died.
The Georgian government said Sunday that 6,000 Russian troops have rolled into South Ossetia from the neighboring Russian province of North Ossetia and 4,000 more landed in Abkhazia. The Russian military wouldn't comment on troop movements.
Russia also sent a naval squadron to blockade Georgia's Black Sea coast. Ukraine, where the ships were based, warned Russia in response that it has the right to bar the ships from coming back to port because of their mission.
Both Ukraine and Georgia have sought to free themselves of Russia's influence, and to integrate into the West and join NATO.
Georgia said it has shot down 10 Russian planes, but Russia acknowledged only two.
NATO Secretary General Jaap de Hoop Scheffer said Russia violated Georgia's territorial integrity in South Ossetia and employed a "disproportionate use of force."
Adding to Georgia's woes, Russian-supported separatists in Abkhazia launched air and artillery strikes on Georgian troops to drive them out of a small part of the province they control.
Abkhazia's separatist government called out the army and reservists on Sunday and declared it would push Georgian forces out of the northern part of the Kodori Gorge, the only area of Abkhazia still under Georgian control.
Separatist Abkhazia forces also were concentrating on the border near Georgia's Zugdidi region.
Associated Press writers David Nowak in Gori, Georgia; Douglas Birch in Vladikavkaz, Russia; and Jim Heintz, Vladimir Isachenkov and Lynn Berry in Moscow contributed to this report.