Ukraine rebels show weapons pullback; Kiev rejects 'empty words'

MAKIYVKA, Ukraine Pro-Russia separatists brought reporters on Tuesday to witness the withdrawal of heavy weapons from the front line in east Ukraine under a ceasefire deal, but Ukraine said the rebels were using the cover of the truce to reinforce for another advance.

Fighting has eased in eastern Ukraine in recent days, raising hope that a ceasefire due to start on Feb. 15 can finally take effect after the rebels initially ignored it to storm a government-held town last week.

The prospect that the ceasefire will fail has fueled a rout in the Ukrainian hryvnia, which plunged 11 percent to close at 31.63 to the dollar. The currency has already lost half its value since the start of this year after halving during the whole of 2014. Dollar bonds issued by Ukrainian companies sold off heavily after authorities tightened currency controls.

A feud over natural gas, which appeared to have been settled for the winter by an agreement late last year, has also resurfaced, with Moscow threatening to cut off Kiev's supplies in two days unless Kiev pays more money.

Since taking the railway hub of Debaltseve in one of the worst defeats of the war for Kiev, the Moscow-backed rebels have indicated they now want to abide by the truce. Kiev says the rebels are still shooting, which they deny.

Reuters journalists in rebel-held territory watched 10 trucks carrying howitzers roll through Makiyvka, near rebel-held Donetsk. Rebels said the guns were on their way from Donetsk toward Amvrosiyvka, a town far from the front and close to the Russian frontier.

Near Amvrosiyvka, Reuters journalists saw a second convoy carrying 14 howitzers, also heading toward the Russian border.

Rebel commander Eduard Basurin said there were no plans for any further military advances. "That's it. We are going no further," he said.

He said the rebels still aimed to gain control of the entire territory of east Ukraine's two rebellious provinces, including the government-held port of Mariupol, but would seek this through "negotiations with the Ukrainian side".

Basurin said late on Tuesday that 100 artillery pieces had been pulled back during the course of the day, and the rebels intended to complete the entire withdrawal of all heavy weapons as required under the truce, despite an announcement by Kiev that it was not yet ready to start.

"However many there are, they will all be withdrawn. The mission of the OSCE will monitor all the sectors and confirm whether or not we are lying," he told reporters in Donetsk, referring to the European security body tasked with verifying the truce.

The Kiev military said rebel assertions they were pulling back guns were "empty words".

"On the contrary, the terrorist groups, making use of the ceasefire period, are reinforcing their units and building up ammunition."

NOT GIVING UP

Western countries have not given up on the ceasefire deal to end fighting that has killed more than 5,600 people, although they remain suspicious of the rebels and their presumed patron, Russian President Vladimir Putin.

Foreign ministers of Russia, Ukraine, France and Germany met in Paris on Tuesday and backed the ceasefire, pledging more resources to enable the OSCE to monitor it.

The rebels say they have observed the truce despite their massive assault last week, arguing that the ceasefire never applied to their target, the town of Debaltseve. Kiev and its Western allies say the operation was a brazen violation of the truce.

European countries have warned of new economic sanctions against Moscow if the rebels advance deeper into territory the Kremlin calls "New Russia". Washington says it could arm Kiev.

Britain said it would deploy military personnel to Ukraine in the next month to help train the Ukrainian army, warning that Moscow would destabilize other countries if left unchallenged.

SOLE SIGNAL

Kiev's military said one of its soldiers had been killed and seven wounded in the past 24 hours, and repeated that it would not start pulling back weapons until shooting stopped.

"As soon as the fighters implement the ceasefire for two full days, that is the sole signal to start the withdrawal," military spokesman Andriy Lysenko said in a briefing, noting however that fighting had diminished.

Separatist press service DAN reported 10 incidents of government shelling near Donetsk.

However, Basurin denied Kiev's assertions that there were serious clashes in villages near Mariupol, saying there had been provocations from the Ukrainian side but no major incidents. Kiev fears Mariupol, with its 500,000 people, could be the next major rebel target.

Kiev and its Western allies say the rebels are funded and armed by Moscow, and backed by Russian military units. Moscow denies aiding sympathizers in Ukraine, and says heavily armed Russian-speaking troops operating without insignia there are not its men.

Asked if Moscow is lying when it denies sending men and material, U.S. Secretary of State John Kerry said: "Yes."

Putin, who has mainly struck a conciliatory tone since the rebels captured Debaltseve, said in a television interview he did not think Russia and Ukraine would go to war.

"I think that such an apocalyptic scenario is unlikely and I hope this will never happen," he said.

(Additional reporting by Natalia Zinets, Pavel Polityuk, Alessandra Prentice and Peter Graff in Kiev, Katya Golubkova and Vladimir Soldatkin in Moscow and John Irish in Paris; Writing by Peter Graff; Editing by Giles Elgood and Mark Trevelyan)