Ukraine President Visits Frontline City Amid 'Shaky' Cease-Fire

(Reuters) - Ukrainian President Petro Poroshenko visited the eastern port of Mariupol on Monday and promised to deal a "crushing defeat" to pro-Russian rebels massed on the edge of town if they tried to advance in violation of a ceasefire agreement.

"I have ordered (the military) to secure the defense of Mariupol with howitzers, multiple rocket launchers, tanks, anti-tank weapons and air cover," Poroshenko told a crowd of steel workers in the port on the Sea of Azov near the Russian border.

The ceasefire, which took effect on Friday evening, is part of a peace plan intended to end a five-month-old conflict the United Nations' human rights envoy said had killed more than 3,000 people. It has also caused the sharpest confrontation between Russia and the West since the Cold War.

The truce was largely holding on Monday, though each side accused the other of sporadic shelling, including in Mariupol, a city of about half a million, shortly after the president's arrival there.

The Organisation for Security and Cooperation in Europe (OSCE), which is monitoring the ceasefire, urged the two sides to seek a political "breakthrough", though they remain far apart on the future of eastern Ukraine, home to much of the country's heavy industry. The rebels refuse to accept rule from Kiev.

"Mariupol was, is and will be Ukrainian," Poroshenko declared.

"The enemy will suffer a crushing defeat," said Poroshenko, who agreed to the ceasefire and a wider peace plan after the rebels - backed, Kiev says, by Russian firepower - made sweeping battlefield gains. Russia denies involvement.

In the earlier days of the uprising, rebels seized control of part of Mariupol, occupying some buildings including a police station. Some offices were badly damaged or burnt down. Since the rebels were driven out by Ukrainian forces, sentiment appears to have swung more in favor of the government.

Residents built fortifications around the town, whose port is vital for Ukraine's steel exports, and set up a militia. Shops have reopened and Ukrainian flags are widely visible.

Mariupol was the scene of fierce fighting before the ceasefire, when rebels advanced in an attempt to retake it, and also saw the most serious violation of the ceasefire on Saturday night when government forces there came under artillery attack.

A woman was killed and four people injured in that shelling.

The cities of Donetsk and Luhansk, strongholds of the rebellion, remain in rebel hands.

SANCTIONS

Poroshenko, who received a warm welcome in Mariupol, said the rebels had so far handed over about 1,200 prisoners-of-war to the Ukrainian side under the terms of the ceasefire accord.

OSCE chair Switzerland described the ceasefire as "shaky" and said the next few days would be crucial.

Swiss President Didier Burkhalter said the truce alone was not sufficient, adding: "The different actors must really push for a (political) breakthrough."

After his trip to Mariupol, Poroshenko said a number of NATO countries had agreed on the direct supply of arms to Ukraine during the alliance's annual summit in Wales.

"(We) managed to agree with a series of NATO countries on direct deliveries of modern weapons which will help us defend ourselves and win," said a statement on the president's website.

A senior aide to Poroshenko said on Sunday Kiev had agreed in Wales on the provision of weapons and military advisers from five NATO states, but four of the five swiftly denied any such deal had been reached.

U.S. Defense Secretary Chuck Hagel said in Turkey he was not aware of any "secret deal that was made in Wales about supplying lethal weapons to the Ukrainians".

Earlier, Ukrainian military spokesman Andriy Lysenko told a news briefing in Kiev that Ukrainian forces were observing the ceasefire except in self-defense and had remained in their positions since Friday evening.

In rebel-held Donetsk, eastern Ukraine's industrial hub, "prime minister" Alexander Zakharchenko of the self-proclaimed Donetsk People's Republic made similar accusations against the Ukrainian side, adding: "We have shown the whole world we are not terrorists, we are ready for talks and we can listen."

Kiev and its Western backers accuse Russia of sending troops across the border and arming the rebels, charges Moscow denies.

Lysenko said on Monday Ukraine had seen no sign of Russian troop movements over the border in the past 24 hours.

A Kremlin statement said Russian President Vladimir Putin spoke by phone on Monday with Poroshenko on "steps that will facilitate a peaceful resolution to the situation", without giving further details.

Russian Prime Minister Dmitry Medvedev said Moscow would respond to any new Western economic sanctions imposed over its role in Ukraine, adding it might target flights over Russia.

The European Union planned to put Russia's top oil producers and pipeline operators Rosneft, Transneft and Gazprom Neft on its list of state-owned firms that will not be allowed to raise capital or borrow on European markets, an EU diplomat said.

In general, the EU sanctions on raising money in the EU for Russian companies will apply to firms that have turnover of more than 1 trillion rubles($26.95 billion), at least half of it generated from the sale or transport of oil, the diplomat said.

But EU governments delayed signing off on the package because some governments want to discuss how to suspend the sanctions if a ceasefire holds, diplomats said.

EU sanctions do not encompass the gas sector and in particular state-owned Gazprom, the world's biggest gas producer and the biggest gas supplier to Europe.

"FASCISTS"

In Donetsk, authorities declared Monday a public holiday to mark the expulsion of "fascists" from the heavily industrialized, mainly Russian-speaking Donbass region.

The separatists have used the word "fascist" to denote the central government in Kiev since Poroshenko's predecessor Viktor Yanukovich, who came from eastern Ukraine and was backed by Moscow, fled to Russia in February after months of anti-government protests in the Ukrainian capital.

On Monday afternoon a Reuters reporter heard renewed mortar fire near to the government-held airport north of Donetsk.

Most residents of Donetsk blame Kiev for the conflict, after months of heavy bombardment of the city by government forces, but some had harsh words also for the separatists and few expected the current ceasefire to last.

"The ceasefire is not holding, that's clear from just the few days I have been back in the city," said Yevgenia, who has taken refuge with relatives in western Ukraine.

"We came back for warm clothes and are leaving right away. It's so sad to see the city empty, deserted, armed people with cars crossing at red traffic lights, kidnapping people or taking away their cars. What good can they build here?"