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KYIV: Russian forces seized full control of the eastern Ukrainian city of Sievierodonetsk on Saturday, both sides said, confirming Kyiv's biggest battlefield setback for more than a month following weeks of some of the war's bloodiest fighting.

Ukraine called its retreat from the city a "tactical withdrawal" to fight from higher ground in Lysychansk on the opposite bank of the Siverskyi Donets river. Pro-Russian separatists said Moscow's forces were now attacking Lysychansk.

The fall of Sievierodonetsk - once home to more than 100,000 people but now a wasteland - was Russia's biggest victory since capturing the port of Mariupol last month. It transforms the battlefield in the east after weeks in which Moscow's huge advantage in firepower had yielded only slow gains.

Russia will now be hoping to press on and seize more ground on the opposite bank, while Ukraine will hope that the price Moscow paid to capture the ruins of the small city will leave Russia's forces vulnerable to a counterattack in coming weeks.

"The city is now under the full occupation of Russia. They are trying to establish their own order, as far as I know they have appointed some kind of commandant," Mayor Oleksandr Stryuk said on national television.

Kyrylo Budanov, Ukraine's military intelligence chief, told Reuters that Ukraine was carrying out "a tactical regrouping" by pulling its forces out of Sievierodonetsk.

"Russia is using the tactic ... it used in Mariupol: wiping the city from the face of the earth," he said. "Given the conditions, holding the defence in the ruins and open fields is no longer possible. So the Ukrainian forces are leaving for higher ground to continue the defence operations."

Russia's defence ministry said "as a result of successful offensive operations" Russian forces had established full control over Sievierodonetsk and the nearby town of Borivske.

Russia's Interfax news agency cited a representative of pro-Russian separatist fighters saying Russian and pro-Russian forces had entered Lysychansk across the river and were fighting in urban areas there.

Seeking to further tighten the screws on Russia, U.S. President Joe Biden and other G7 leaders attending a summit in Germany starting on Sunday will agree on an import ban on new gold from Russia, a source familiar with the matter told Reuters.

'It was horror'

In the Ukrainian-held Donbas town of Pokrovsk, Elena, an elderly woman in a wheelchair from Lysychansk, was among dozens of evacuees who arrived by bus from frontline areas.

"Lysychansk, it was a horror, the last week. Yesterday we could not take it any more," she said. "I already told my husband if I die, please bury me behind the house."

Ukraine stands with Moldova against threats from Russia: foreign minister

As Europe's biggest land conflict since World War Two entered its fifth month, Russian missiles also rained down on western, northern and southern parts of the country.

Russian President Vladimir Putin sent tens of thousands of troops over the border on Feb. 24, unleashing a conflict that has killed thousands and uprooted millions. It has also stoked an energy and food crisis which is shaking the global economy.

Since Russia's forces were defeated in an assault on the capital Kyiv in March, it has shifted focus to the Donbas, an eastern territory made up of Luhansk and Donetsk provinces. Sievierodonetsk and Lysychansk were the last major Ukrainian bastions in Luhansk.

The Russians crossed the river in force in recent days and have been advancing towards Lysychansk, threatening to encircle Ukrainians in the area.

The capture of Sievierodonetsk is likely to seen by Russia as vindication for its switch from its early, failed attempt at "lightning warfare" to a relentless, grinding offensive using massive artillery in the east.

Moscow says Luhansk and Donetsk, where it has backed uprisings since 2014, are independent countries. It demands Ukraine cede the entire territory of the two provinces to separatist administrations.

Ukrainian officials had never held out much hope of holding Sievierodonetsk indefinitely, but have hoped to exact a high enough price to exhaust the Russian army.

Ukraine's top general Valeriy Zaluzhnyi wrote on the Telegram app that newly arrived, U.S.-supplied advanced HIMARS rocket systems were now deployed and hitting targets in Russian-occupied parts of Ukraine.

Asked about a potential counterattack in the south, Budanov, the Ukrainian military intelligence chief, told Reuters that Ukraine should begin to see results "from August".

Russian missiles also struck elsewhere overnight. "48 cruise missiles. At night. Throughout whole Ukraine," Ukrainian presidential adviser Mykhailo Podolyak said on Twitter. "Russia is still trying to intimidate Ukraine, cause panic and make people be afraid."

The governor of Lviv region in western Ukraine said six missiles were fired from the Black Sea at a base near the border with Poland. Four hit the target but two were destroyed.

In the north the governor of the Zhytomyr region said strikes on a military target killed at least one soldier. In the south the mayor of Mykolaiv near the Black Sea, said five cruise missiles hit the city and nearby areas on Saturday.

Russia denies targeting civilians. Kyiv and the West say Russian forces have committed war crimes against civilians.

The war has had a huge impact on the global economy and European security arrangements, driving up gas, oil and food prices, pushing the EU to reduce its heavy reliance on Russian energy and prompting Finland and Sweden to seek NATO membership.

Leaders of the Group of Seven rich democracies are expected to demonstrate support for Ukraine and discuss further measures against Russia at their coming summit.

British Prime Minister Boris Johnson said he feared Ukraine could face pressure to agree a peace deal, and the consequences of Putin getting his way in Ukraine would be dangerous to international security.

EU leaders this week approved Ukraine's formal candidacy to join the bloc - a decision that Russia said on Friday amounted to the EU's "enslaving" of neighbouring countries.

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