Turkey vowed to press ahead with its offensive in northern Syria on Tuesday despite US sanctions and growing calls for it to stop, while Syria's Russia-backed army moved on the key city of Manbij that was abandoned by US forces.
"They say 'declare a ceasefire'. We will never declare a ceasefire," Turkish President Tayyip Erdogan told reporters after a visit to Baku.
"They are pressuring us to stop the operation. They are announcing sanctions. Our goal is clear. We are not worried about any sanctions."
Erdogan said an attack from Manbij that killed one Turkish soldier was launched by Syrian government forces.
Reuters journalists accompanied Syrian government forces who entered the center of Manbij, a flashpoint where US troops had previously conducted joint patrols with Turkey.
Russian and Syrian flags were flying from a building on the city outskirts and from a convoy of military vehicles.
Russia's Interfax news agency, citing Moscow's Defense Ministry, said later that Syrian forces had taken control of an area of more than 1,000 square km (386 miles) around Manbij, including Tabqa military airfield.
US President Donald Trump's unexpected decision to withhold protection from Syria's Kurds after a phone call with Erdogan a week ago swiftly upended five years of US policy on Syria.
As well as clearing the way for the Turkish incursion, the US withdrawal gives a free hand to Washington's adversaries in the world's deadliest ongoing war, namely Syrian President Bashar al-Assad and his Russian and Iranian allies.
The Syrian army deployments into Kurdish-held territory amount to a victory for Assad and Russia, giving them a foothold in the biggest remaining swathe of Syria that had been beyond their grasp through much of its eight-year-old war.
The United States announced on Sunday it was withdrawing its entire force of 1,000 troops from northern Syria. Its former Kurdish allies immediately forged a new alliance with Assad's government, inviting the army into towns across their territory.
A Reuters cameraman on the Turkish frontier reported heavy bombardment on Tuesday morning of the Syrian border town of Ras al Ain, where an SDF spokesman reported a battle going on.
US military aircraft carried out a "show of force" around the town of Kobani after Turkish-backed fighters came close to American forces, a US official told Reuters. The Turkish-backed fighters dispersed after the show of force, the official said.
US Vice President Mike Pence will meet Erdogan on Thursday in Ankara.
"Vice President Pence will reiterate President Trump's commitment to maintain punishing economic sanctions on Turkey until a resolution is reached," the White House said in a statement.
After Trump announced a set of sanctions on Monday to punish Ankara, US prosecutors hit Turkey with charges on the majority state-owned Halkbank for taking part in a multibillion-dollar scheme to evade US sanctions against Iran.
A Turkish embassy official in Washington said the indictment did not contribute positively to the current state of US-Turkey ties. Turkish and American officials had been in talks on the Halkbank case for at least a year.
More US Sanctions Pressure
A senior Trump administration official said Washington would threaten more sanctions to persuade Turkey to reach a ceasefire and halt its offensive.
Republican Senator Lindsey Graham, a loyal Trump supporter who has nevertheless been highly critical of the president's troop withdrawal, said he would introduce a bill on Thursday to impose tougher sanctions on Turkey.
The measures announced on Monday - mainly a hike in steel tariffs and a pause in trade talks - were less robust than financial markets had anticipated, and Trump's critics derided them as too feeble to have an impact.
The Turkish lira, which had fallen on the expectation of tougher US measures, recovered after the sanctions were announced, as did its bond and stock markets, with traders noting that Trump had spared Turkish banks.
Bilateral trade between Turkey and the United States is relatively small - around a tenth the size of Turkey's trade with Europe. Washington's most effective form of economic leverage would be to hinder Turkey's access to US financial markets, a step Trump has so far avoided.
In a potentially more damaging blow, German carmaker Volkswagen (VOWG_p.DE) said it was postponing a final decision on whether to build a 1 billion euro ($1.1 billion) plant in Turkey, citing concern over "current developments".
Following Trump's announcement, the US Treasury said on Monday it had sanctioned Turkey's energy, defense and interior ministers.
Accusations of Betrayal
Trump has defended his reversal of US policy as part of a plan to extricate the United States from "endless" wars in the Middle East.
But his critics cast it as a betrayal of the Kurds, loyal allies who lost thousands of fighters as the principal ground force in Washington's battle against Islamic State.
A senior US defense official said the US military would continue to combat Islamic State militants, who experts say could take advantage of the chaos to stage a resurgence.
"The intent is to reposition (US forces leaving Syria) and use what assets and personnel we have available to continue the mission," the official said.
However, without a partnership on the ground in Syria like the with the Kurdish-led Syrian Democratic Forces, any such US efforts would almost certainly be limited. The Kurdish YPG militia, the key component of the forces who fought Islamic State, is seen by Ankara as a terrorist group aligned with Kurdish separatist insurgents in Turkey.
Turkey says it aims to defeat the YPG and create a "safe zone" where millions of Syrian war refugees now in Turkey could be resettled.
The United Nations says 160,000 people have fled their homes as Turkish forces advance. The regional Kurdish administration puts the number of displaced at 270,000.
The UN Security Council will likely meet on Wednesday to discuss the latest developments in Syria, diplomats said, the second such session since Turkey began its offensive.
The UN Human Rights office said on Tuesday that Turkey could be held responsible for war crimes by fighters under its direction, potentially including the assassination of Hevrin Khalaf, a leading Kurdish politician killed on the side of a highway on Saturday by gunmen who posted the attack on the internet.
Turkish-backed fighters have denied blame for her murder.
Erdogan said Ankara was giving the world a chance to bring peace to the region.
"The international community missed its opportunity to prevent the Syrian crisis from pulling an entire region into a maelstrom of instability," he wrote in the Wall Street Journal. "The European Union - and the world - should support what Turkey is trying to do."