By Gabriela Baczynska and Thomas Grove KRAMATORSK/SLAVIANSK, Ukraine (Reuters) - Separatists flew the Russian flag on armored vehicles taken from the Ukrainian army on Wednesday, humiliating a Kiev government operation to recapture eastern towns controlled by pro-Moscow partisans. Six armored personnel carriers were driven into the rebel-held town of Slaviansk to waves and shouts of "Russia! Russia!". The military setback leaves Kiev looking weak on the eve of a peace conference on Thursday, when its foreign minister will meet his Russian, U.S. and European counterparts in Geneva. So far, the United States and European Union have imposed only targeted sanctions against a list of Russian and Ukrainian individuals and firms in retaliation for Moscow's seizure and rapid annexation of Crimea from Ukraine, completed last month.
The US economy is showing clear signs of emerging from the brutal winter, with consumer spending picking up broadly, the Federal Reserve's Beige Book survey said Wednesday. "Economic activity increased in most regions" of the country since the early March report, the Beige Book said, with "modest or moderate" expansion in most of the Fed regions surveyed. The review of economic conditions covered mid-February through early April, capturing still-severe winter weather effects that began to fade last month. The survey confirmed the Fed's view that much of the economy's hibernation earlier in the year was due to severe winter weather, and a thaw would come as weather warms up.