A midnight air strike near the heart of rebel-held Donetsk provided a terrifying signal for residents that the conflict between insurgents and government forces is drawing closer to their doorsteps.

Valentina Petrovna, a middle-aged woman, peered into a crater that had suddenly appeared not far from her house on Wednesday morning.

"People were already asleep. They ran out on to the street. We ran into the cellar, we didn't sleep all night," she told AFP.

"I called my brother in Russia to tell him they have started bombing here. I have already sent my grandchildren there," she added, starting to weep.

"When will it all end? What are we suffering for?"

Rebels said the strike hit the dusty street of warehouses, workshops and offices in an industrial area east of the leafy centre at 0040 (2140 GMT on Tuesday).

The explosions blew two large holes in the tarmac -- one around a metre (three foot) deep.

Nearby the force of the blast had ripped apart the entrance to a warehouse complex, as well as blown out windows and peeled off the corrugated-iron roofs of an office building and auto workshop.

Engineers in body armour were at the scene along with firefighters and emergency gas workers who were dealing with an overground pipeline damaged in the attack.

Another large crater could be seen next to a railway used to transport fuel.

Nobody was injured in what appeared to be the first air strike in the heart of the city of one million.

"They started the bombardment and a plane flew lower and there were two salvoes of missiles," said Alexander, a local welder, as he took pictures on his cell phone.

The rockets struck around seven kilometres (four miles) from the rebel headquarters in the former regional government building. The impact was heard across the city, where a 2300 curfew is in place.

AFP reporters in central Donetsk heard what appeared to be the hum of aircraft and several loud explosions.

The target was unclear, and Ukraine's military has denied any responsibility.

- The roar of planes -

An employee from one of the warehouses on the road, asking not to be named, told AFP that rebels had been based in the area recently.

But a rebel accompanying international OSCE observers as they took photographs at the scene claimed there were no insurgent bases in the area.

"We heard the roar of planes, then an explosion. I can't say what it was," the camouflaged fighter said.

Another local resident, 18-year-old Vladik, wearing a vest and shorts, said the planes "came in twice".

Asked if there were answering shots from the ground, he said: "We heard what was maybe anti-aircraft fire" from the ground.

Before this morning, he said he had only heard the sound of automatic weapons in the area.

Kiev denied it was behind the air strike, insisting that Ukraine's military does not bomb built-up areas.

The plane heard by locals was only used for communication purposes, Andriy Lysenko, spokesman for Kiev's National Security and Defence Council, told reporters.

Until now, fighting has been focused on the western outskirts of the city, including a bloody battle for control of the airport in May that left its terminal building a gutted wreck and dozens of fighters dead.