The Ukrainian president says his forces are making an "organised" withdrawal from the embattled town of Debaltseve.
Petro Poroshenko said 80% of Ukraine's troops left on Wednesday morning after several days of fierce fighting.
Russia
said Ukrainian forces had tried to fight their way out of the city
after being encircled but Mr Poroshenko insisted they were never
surrounded.
The rebel advance on Debaltseve, which came in spite of the recent ceasefire agreement, has been widely condemned.
Nato
chief Jens Stoltenberg said the rebels' offensive had put the wider
peace agreement at risk and urged Russia to "use all its influence on
the separatists to make them respect the ceasefire".
He also
called on Moscow to withdraw its forces from Ukraine, saying Russian
troops, artillery and air defence units were still active in the
country.
Earlier, Russian Foreign Minister Sergei Lavrov insisted
the rebels' actions in Debaltseve had not violated the ceasefire
because it was a rebel-held city when the peace agreement was signed
last week.
Media captionSergei Lavrov: "The priority must be saving the lives of Ukrainian troops"
He
urged rebels to provide troops who surrendered with food and clothes
and said he hoped the situation in the city would "not be used to find a
pretext to actually undermine [the agreement]".
Eyewitnesses saw dozens of tanks and columns of weary Ukrainian troops retreating from Debaltseve on Wednesday.
Russia's
state-controlled Channel One TV showed footage of what it said were
rebels raising their flag on top of a high-rise building in the city.
One
rebel commander in Debaltseve told the BBC that conditions were dire,
with no electricity and a shortage of food and water. He said rebels
were sharing their rations with the remaining civilians.
'Brutal violation'
President Poroshenko said in a statement:
"Debaltseve was under our control, there was no encirclement, and our
troops left the area in a planned and organised manner."
He
called for "a firm reaction from the world to Russia's brutal violation
of the Minsk agreements, the ceasefire regime and the withdrawal of
heavy weaponry".
Mr Poroshenko visited the soldiers who had left
Debaltseve in the town of Artemivsk on Wednesday. Earlier, he said it
would be an honour to shake hands with "Ukrainian heroes".
Meanwhile,
an official at a morgue in Artemivsk said the bodies of 25 Ukrainian
soldiers had been brought to the facility from Debaltseve since Tuesday
evening but this has not been confirmed.
Rebels have claimed that hundreds of Ukrainian troops were killed in clashes around the city, but Mr Poroshenko denied this.
The
government in Kiev admitted that that some soldiers were taken prisoner
in Debaltseve, but gave no details on how many were seized.
Key prize
The withdrawal comes after Russian President Vladimir Putin urged Ukraine's troops in Debaltseve to surrender.
Mr
Putin is due to speak by telephone later to German Chancellor Angela
Merkel, Frence President Francois Hollande and Mr Poroshenko, according
to the French government.
Spokesman Stephane Le Foll insisted the
agreement announced last week by the four leaders to end the fighting
in eastern Ukraine was not dead, and that progress had been made.
Analysis: David Stern, BBC News, Kiev
The rapidly deteriorating situation inside Debaltseve and its
possible fall to Russian-backed forces - despite a ceasefire brokered
specifically to avoid this scenario - raises a number of questions but
one in particular: What were Angela Merkel and Francois Hollande
thinking?
Did they receive assurances that the insurgents would
observe the ceasefire? Or was the fate of the strategic railroad
junction under question even during the Minsk negotiations? If so, why
did the Europeans proceed with an agreement that was unenforceable?
It's
entirely possible that the Minsk accords have done irreparable damage
to the peace process and seriously weakened the position of President
Petro Poroshenko. Ukrainian officials may very well be asking what other
"exceptions" to the ceasefire will the rebels insist on?
Mrs
Merkel and Mr Hollande have long insisted there's no military solution
to the war in eastern Ukraine. Now there may not be a diplomatic one
either. International observers monitoring the truce have been unable to enter Debaltseve.
The
city has become a key prize for rebels and government forces, as it
sits on a strategic railway line linking the rebel-held cities of
Donetsk and Luhansk.
Most of its 25,000 population has been evacuated but about 7,000 civilians are still believed trapped by the fighting.
The ceasefire, which came into effect on Sunday, has been broadly observed elsewhere.
Rebel
leaders in the so-called Donetsk People's Republic said on Wednesday
they had begun to withdraw heavy weaponry from the parts of the
frontline where the ceasefire was holding.
The withdrawal was due
to start no later than the second day after the truce came into effect
and be completed within two weeks, creating buffer zones 50-140km (30-85
miles) wide.
The UN says more than 5,600 people have been killed
in the conflict since April, but there are fears the actual death toll
could be much higher.
Ukraine's pro-Western government says
Russia is supporting the separatists with troops and weapons, but the
Kremlin has consistently denied this. Minsk agreement: Key points
Ceasefire from 00:01 on 15 February (22:01 GMT 14 February)
Heavy weapons to be withdrawn,
beginning on 16 February and completed in two weeks - beyond a buffer
zone behind the current front line for Ukrainian forces and behind the
September front line for separatist forces
All prisoners to be released; amnesty for those involved in fighting
Withdrawal of all foreign troops and weapons from Ukrainian territory. Disarmament of all illegal groups
Ukraine to allow resumption of normal life in rebel areas, by lifting restrictions
Constitutional reform to enable decentralisation for rebel regions by the end of 2015
Ukraine to control border with Russia if conditions met by the end of 2015
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