KIEV (Reuters) - Ukraine steelmaker Metinvest said on Sunday it has halted production at its Avdiyivka facility in eastern Ukraine, one of Europe's biggest coke plants, after heavy shelling caused major damage.

Avdiyivka produces 40 percent of Ukraine's coke and any production outages will threaten output at the country's steel plants, including two of the largest, which are in Mariupol, a strategic government-held port city in the southeast of the country.

"This is the second powerful bombardment in the past few days ... The business has been stopped as a matter of urgency. Coke production is halted," Metinvest said in a statement on its website. "As soon as the situation stabilizes, work to restore power supply to the factory will begin."

Avdiyivka is on territory controlled by government forces but it lies close to the frontline and the Ukrainian military have accused separatists of attacks there since a ceasefire came into force in mid-February.

On Thursday, one worker was killed and two wounded in what Metinvest described as the heaviest shelling of the plant since the declaration of the ceasefire.

Metinvest, Ukraine's largest steel firm, said on Friday that damage to internal rail tracks at Avdiyivka meant it was not able to bring in raw materials or ship out finished products.

In March, Prime Minister Arseny Yatseniuk accused separatists of trying to destabilize Mariupol, where Russian and Ukrainian sympathizers live side by side, by disrupting supplies to its steel plants from Avdiyivka, around 100 km (70 miles) to the north.

(Reporting by Alessandra Prentice; Editing by Susan Fenton)