* Russia halts war as Sarkozy begins peace mission
* Georgia says Moscow still bombing
* Georgians rally against Russia, hail Saakashvili
* U.S. welcomes "extremely positive" Russian move
By Oleg Shchedrov and Matt Robinson
MOSCOW/TBILISI, Aug 12 (Reuters) - Russian President Dmitry Medvedev ordered a halt to military operations in Georgia on Tuesday in support of an international peace plan promoted by French President Nicolas Sarkozy.
Both sides have now declared a ceasefire, but each has accused the other of failing to keep its promises.
Sarkozy endorsed the plan in the Kremlin alongside Medvedev and then flew off to Tbilisi. He cautioned that Russia and Georgia, who have been fighting since last Thursday, had yet to agree a peace deal.
"We don't yet have peace," he told a news conference. "But we have a provisional cessation of hostilities. And everyone should be aware that this is considerable progress. There is still much work to be done."
In a first U.S. reaction to the ceasefire, Washington's envoy to the region, Matthew Bryza, termed the Russian move "extremely positive".
Georgian President Mikheil Saakashvili had earlier addressed a huge crowd outside the parliament building in Tbilisi and was hailed as a hero for defending his country against aggression from Moscow.
Speakers denounced Russia as the crowd chanted: "Georgia, Georgia!" Posters held up by demonstrators showed a photograph of Putin with the caption: "Wanted: Crimes against humanity in the world."
Saakashvili appeared to cheers and pledged that one day Georgia would beat Russia. "I promise you today that I'll remind them of everything they have done and one day we will win," he said.
LEAVING THE CIS
The Georgian leader also said his country was quitting the Commonwealth of Independent States, a loose grouping of ex-Soviet states led by Moscow, in protest at Russia's actions.
The conflict over the tiny separatist province of South Ossetia has spooked markets and rattled the West. It began when Georgia tried to retake the pro-Russian region last week, provoking a massive counter-offensive from Moscow.
The main military action on Tuesday was a push by Abkhazia, a second breakaway region of Georgia on the Black Sea coast, against Georgian forces occupying a corner of the territory.
Abkhaz leader Sergei Bagapsh said his troops had "fully regained control over the upper part of the Kodori Gorge", a narrow strip of land cutting into Abkhazia. Russian forces said they were not involved.
Closer to South Ossetia, a series of sudden explosions in the Georgian town Gori, about 70 km (40 miles) west of Tbilisi, killed at least five civilians, a Reuters correspondent said.
CRATERS IN THE STREET
Television footage and pictures suggested the blasts were caused by mortars firing from 1-2 km away, though it was not clear who was responsible. Russian forces were reported to be around 12 km (7 miles) away at the time and denied attacking the town, the birthplace of Soviet leader Josef Stalin.
A Reuters witness said blasts shook the town in quick succession, gouging craters in the street and sending shrapnel flying through the air.
Broadcaster RTL later said a Dutch cameraman was among the dead and a correspondent was wounded.
Further north in the separatist capital Tskhinvali, houses were still burning, surrounded by orchards and chestnut groves, after the battles of the last week. Russian tanks and armoured personnel carriers patrolled the almost deserted streets.
Teimuraz Pliyev, 62, said he had spent three days hiding in a basement with his wife and children.
"It looks like a small Stalingrad, doesn't it?" he told reporters. "Barbarians! Look: this is Georgian democracy! If it weren't for Russia, we would have already been buried here."
A Russian army colonel, who declined to be identified, said: "There's still some occasional sniper fire, but we are finishing them off steadily and surely."
Russia's migration authorities said 16,500 refugees had fled over the border from South Ossetia into Russia and were being looked after in camps.
Despite Tuesday's diplomatic progress, there are still many issues separating the two sides before any final deal is struck.
Medvedev said the joint text he had agreed with Sarkozy laid down six conditions for a lasting settlement. It was not immediately clear whether Georgia would accept them.
Saakashvili had given a green light on Monday to a four- point plan proposed by French Foreign Minister Bernard Kouchner, but some elements of Tuesday's plan appeared to be new.
Russian Foreign Minister Sergei Lavrov said Georgia must agree to remove its troops far beyond the borders of South Ossetia and sign a legally binding pledge not to attack it again if Moscow were to agree to a peace deal.
Using language redolent of his mentor, Vladimir Putin, Medvedev also blasted Saakashvili as a "lunatic". Saakashvili had promised voters he would win back South Ossetia and Abkhazia.
"You know, lunatics' difference from other people is that when they smell blood it is very difficult to stop them. So you have to use surgery," Medvedev told a news conference.
The two sides also continued to argue about whether they were abiding by the ceasefires they have already declared.
"Despite the Russian president's claims earlier this morning that military operations against Georgia have been suspended, at this moment, Russian fighter jets are bombarding two Georgian villages outside South Ossetia," the Georgian government said.
Russia's Defence Ministry dismissed the allegation as an "information provocation", adding that Georgian guns continued to pound its positions in South Ossetia.
Russia says 1,600 South Ossetian civilians have been killed in the fighting and thousands are homeless but these figures have not been independently verified. Georgia has reported close to 200 killed and hundreds of wounded. (Additional reporting by Guy Faulconbridge, Conor Sweeney and Simon Shuster in Moscow, James Kilner in Tbilisi, Dmitry Solovyov in Tskhinvali; writing by Michael Stott; editing by Meg Clothier)
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