YANGON (AFP) - Seven Myanmar soldiers have been sentenced to jail for killing villagers during an interrogation, the military said, a rare ruling in a former junta-run country where the army has long operated with impunity.

The sentencing handed out by a military court on Thursday (Sept 15) suggests the still-powerful army is looking to further revamp its image as the country opens up to the West and hurtles through a democratic transition.

"Seven Myanmar army soldiers are sentenced to five years for killing local people in Mong Yaw village in Lashio township, Shan State," the military said in statement on Facebook. "They all have to be sentenced to five years with hard labour in a countryside prison."

The bodies of the villagers were found in shallow graves several days after they were taken into custody by soldiers following a skirmish with ethnic rebels in Shan state - one of many regions riven by decades-long insurgencies.

The Tatmadaw, as the army is known, controlled Myanmar for half a century in a brutal reign rife with rights abuses, including allegations of torture, rape and recruiting child soldiers.

Although it has rolled back its powers since handing over power to a quasi-civilian government in 2011, the army seldom admits to misconduct among its troops.

The country's new civilian leader, democracy activist Aung San Suu Kyi, has made ending the warfare a top priority since her party took power in March following landmark polls.

But bringing peace to the country's borderlands will ultimately depend on the military, a powerful player that still controls key government bodies.

On Wednesday, US President Barack Obama vowed to lift decades-old sanctions, imposed when the former military junta was in power, during a visit by Ms Suu Kyi to the White House.

While details are still unclear, the move will likely scrap the blacklist that bars Americans from doing business with more than 100 military leaders, their companies and so-called cronies.

Activists have condemned the move, however, saying it removes a key lever for applying pressure to the army.