KYIV, FEBRUARY 27

Western allies are preparing sweeping new sanctions against Russia, including banishing its key banks from the main global payments system, drawing thanks from Ukraine on Sunday as its forces battled advancing Russian troops.

Russia's military pounded several cities with missiles overnight, setting an oil terminal ablaze in Vasylkiv, southwest of the capital Kyiv, the town's mayor said. The blasts sent flames and smoke into the night sky, online posts showed.

There were reports of heavy fighting near the northeastern city of Kharkiv, where Russian troops blew up a natural gas pipeline, a Ukrainian state communications agency said.

'The enemy wants to destroy everything,' said the mayor of Vasylkiv, Natalia Balasinovich.

Russian President Vladimir Putin launched what he called a special military operation on Thursday, ignoring weeks of Western warnings and saying the 'neo-Nazis' ruling Ukraine threatened Russia's security - a charge Kyiv and Western governments say is baseless propaganda.

The biggest assault on a European state since World War Two threatens to upend the continent's post-Cold War order.

Reuters witnesses in Kyiv reported occasional blasts and gunfire in the city on Saturday night but it was not clear where this was coming from.

'We have withstood and are successfully repelling enemy attacks. The fighting goes on,' Ukrainian President Volodymyr Zelenskiy said in a video message from the streets of Kyiv posted on his social media.

A U.S. defence official said Ukraine's forces were putting up 'very determined resistance' to Russia's air, land and sea advance, which has sent hundreds of thousands of Ukrainians fleeing westwards, clogging major highways and railway lines.

The United States and its European partners also said they would impose restrictions on Russia's central bank to limit its ability to support the rouble and finance his war effort.

'We are resolved to continue imposing costs on Russia that will further isolate Russia from the international financial system and our economies,' the Western allies said as they escalated their punitive response.

'We will implement these measures within the coming days,' said a joint statement from the United States, France, Germany, Canada, Italy, Britain and the European Commission. Read full story

'THANKS TO FRIENDS'

After initially shying away from such a move largely because of concern about the impact on their economies, the allies said they committed to 'ensuring that selected Russian banks are removed from the SWIFT messaging system.'

They did not name the banks that would be expelled, but an EU diplomat said some 70% of the Russian banking market would be affected. Read full story

The decision - which the French finance minister had called a 'financial nuclear weapon' because of the damage it would inflict on the Russian economy - deals a blow to Russia's trade and makes it harder for its companies to do business.

SWIFT, or the 'Society for Worldwide Interbank Financial Telecommunication', is a secure messaging network that facilitates rapid cross-border payments, making it a crucial mechanism for international trade.

The payments system said it was preparing to implement the measures.

Sanctions on Russia's central bank could limit Putin's use of his more than $630 billion in international reserves, widely seen as insulating Russia from some economic harm.

The new measures will prevent Russia from 'using its war chest,' said Ursula von der Leyen, president of the European Commission, the European Union's executive.

Ukrainian Prime Minister Denys Shmygal said in a Twitter post on Sunday: 'Thanks to our friends ... for the commitment to remove several Russian banks from SWIFT.'

'DETERMINED RESISTANCE'

The Kremlin said its troops were advancing again 'in all directions' after Putin ordered a pause on Friday. Ukraine's government said there had been no pause.

Particularly in northern Ukraine, Russia's forces 'have been frustrated by what they have seen is a very determined resistance,' the U.S. official said, without providing evidence.

A Ukrainian presidential adviser said about 3,500 Russian soldiers had been killed or wounded. Western officials have said intelligence showed Russia suffering higher casualties than expected.

Russia has not released casualty figures and it was impossible to verify tolls or the precise picture on the ground.

At least 198 Ukrainians, including three children, have been killed and 1,115 people wounded, Interfax quoted Ukraine's health ministry as saying.

Interfax later cited the regional administration in Donetsk, eastern Ukraine, saying 17 civilians had been killed and 73 wounded by Russian shelling. Moscow says it is taking care to avoid civilian sites.

Ukraine, a democratic nation of 44 million people, won independence from Moscow in 1991 after the fall of the Soviet Union and wants to join NATO and the EU, goals Russia opposes.

Putin has said he must eliminate what he calls a serious threat to his country from its smaller neighbour, accusing it of genocide against Russian-speakers in eastern Ukraine - something Kyiv and its Western allies reject as a lie.

U.N. refugee chief Filippo Grandi said more than 150,000 Ukrainian refugees have crossed into Poland, Hungary, Moldova and Romania.

U.S. President Joe Biden approved the release of up to $350 million worth of weapons from U.S. stocks, while Germany, in a shift from its long-standing policy of not exporting weapons to war zones, said it would send anti-tank weapons and surface-to-air missiles.