(Reuters) - Germany's Angela Merkel warned on Saturday that sending arms to help Ukraine fight pro-Russian separatists would not solve the crisis there, drawing a sharp rebuke from a leading U.S. senator who accused Berlin of turning its back on an ally in distress.

The heated exchange at a security conference in Munich pointed to the fragility of the transatlantic consensus on how to confront Russian President Vladimir Putin over a deepening conflict in eastern Ukraine that has killed more than 5,000.

Russia's annexation of the Crimean peninsula in March last year and evidence that it is supporting separatist forces in the east of the country, which the Kremlin denies, have driven Moscow's relations with the West to a post-Cold War low.

A recent rebel offensive has triggered a flurry of shuttle diplomacy, with Merkel and French President Francois Hollande jetting to Moscow on Friday to try to convince Putin to do a peace deal.

But European officials say the Russian leader may have little incentive to negotiate now, preferring to sit back and watch the separatists make territorial gains in Ukraine that have made a mockery of a prior ceasefire agreement clinched last September in Minsk, Belarus.

Ukraine's military said on Saturday that pro-Russian separatists had stepped up shelling of government forces and appeared to be amassing forces for new offensives on the key railway town of Debaltseve and the coastal city of Mariupol.

The German leader conceded in Munich, after returning home from Moscow in the dead of night, that it was uncertain whether a Franco-German peace plan presented to Kiev and Moscow this week would succeed.

But she flatly rejected the idea that sending weapons to Kiev, an idea being considered by U.S. President Barack Obama, would help resolve the conflict.

"I understand the debate but I believe that more weapons will not lead to the progress Ukraine needs. I really doubt that," said the conservative German leader, who has led a Western initiative to resolve the crisis through negotiations.

"The problem is that I can't envision any situation in which a better-equipped Ukraine military would convince President Putin that he could lose militarily," Merkel added.


Speaking after Merkel, U.S. Senator Lyndsey Graham, a Republican hawk, praised the chancellor for her engagement in the crisis but said it was time for her to wake up to the reality of what he called Moscow's aggressions.

"At the end of the day, to our European friends, this is not working. You can go to Moscow until you turn blue in the face. Stand up to what is clearly a lie and a danger," Graham said.

He accused Merkel of turning her back on a struggling democracy by rejecting down Kiev's request for arms. "That is exactly what you are doing," he said.

Russian Foreign Minister Sergei Lavrov, also in Munich, said there were "good grounds for optimism" that the talks between Merkel, Putin and Hollande could yield a deal.

But Lavrov also delivered a diatribe against the West. He accused Europe and the United States of supporting a "coup d'etat" against deposed Ukrainian leader Viktor Yanukovich, a Moscow ally, a year ago and turning a blind eye to nationalists he said were intent on ethnic cleansing in eastern Ukraine.

"There are growing appeals in the West to support the Kiev policy of militarization, to pump Ukraine full with lethal weapons and to bring it into NATO," Lavrov said. "This position will only exacerbate the tragedy of Ukraine."

Hollande, speaking to reporters in the city of Tulle in central France, cast the talks with Putin as a last-ditch effort to avert full-blown war.

"If we don't manage to find not just a compromise but a lasting peace agreement, we know perfectly well what the scenario will be. It has a name, it's called war," he said.

In a further sign of cracks in the Western approach towards Russia, NATO's top military commander, U.S. Air Force General Philip Breedlove signaled that he now wants the alliance to consider sending weapons to Ukraine.

"I don't think we should preclude out of hand the possibility of the military option," Breedlove told reporters, adding that he was referring to weapons or capabilities and that there was "no conversation about boots on the ground.”

After her speech, Merkel held three-way talks with Ukrainian President Petro Poroshenko and U.S. Vice President Joe Biden. She is due to fly to Washington on Sunday to meet Obama.

(Additional reporting by Adrian Croft, Lesley Wroughton, Shadia Nasralla, Andreas Rinke & Sabine Siebold; Editing by Mark Heinrich)