DONETSK, Ukraine (AFP) - Armed rebels were besieging a hospital in their eastern Ukraine stronghold on Saturday in an apparent bid to seize wounded foes after a deadly firefight, an AFP correspondent said.

A doctor at the hospital in the main eastern city of Donetsk said the pro-Russian separatists were demanding to take injured members of a Ukrainian defence unit to use them in a prisoner swap.

Several gunmen were standing guard outside the hospital, while others could be seen taking up positions on stairwells and other areas inside the building.

"Look around us, the world has become crazy," said one staff member taking a cigarette break outside the four-storey building.

"This is a hospital and we are working while surrounded by armed men. Everyone is scared."

Several members of a pro-Kiev volunteer defence unit attached to the Ukrainian military are being treated at the hospital after a fierce gunbattle on Friday that left at least seven men dead.

The battalion commander Semyon Semenchenko had described in a series of Facebook posts on Friday how his unit was ambushed by militants armed with heavy machine guns and then surrounded after taking refuge in a vacant building.

After the battle, Semenchenko appealed to the rebels "to agree to a truce in exchange for a prisoner swap," although it was not clear how many insurgents the pro-Kiev force was holding.

At the Donetsk hospital, doctors came out to try to negotiate with the gunmen, explaining that their presence was making staff and patients uneasy.

"We are simply observers," responded one of the rebels, at the same timing cocking his Kalashnikov assault rifle.

One doctor in the neurosurgery department said the hospital was treating several seriously wounded men, some being operated on for head injuries.

"These men (the rebels) want to know when they will be able to leave because they want to exchange them for their own wounded."