LONDON, April 10 Ukraine's dollar debt rose on Thursday and its debt insurance costs fell on easing tensions over eastern Ukraine and support from the country's largest international investor.
Pro-Russian separatists are holding buildings in the eastern cities of Lugansk and Donetsk, which Kiev has said could provide a pretext for a Russian invasion.
Ukraine will not prosecute pro-Russian separatists if they leave government buildings they have occupied and give up their weapons, acting President Oleksander Turchinov said on Thursday.
"We had some spikes in volatility on the situation in eastern Ukraine at the weekend, but that has not escalated further," said Andrei Andrijanovs, strategist at frontier markets broker Exotix.
Ukrainian bonds found further support from Templeton Global Bond Fund manager Michael Hasenstab, the biggest international investor in Ukrainian debt.
Hasenstab said on Wednesday in a video recorded last weekend in Kiev that he was confident the country could flourish over the next decade.
Ukraine's dollar bonds maturing 2017 and 2020 rose 1 point from Wednesday's close, according to Reuters data.
Ukraine state energy firm Naftogaz' dollar bond due Sept 2014 rose 1 point to 93.25, and Ukraine's five-year credit default swaps fell 25 basis points from early Thursday levels to 983 bps according to Markit. (Reporting by Carolyn Cohn and Natsuko Waki)