KYIV (REUTERS) - The fate of Ukraine's second-biggest power plant was hanging in the balance on Wednesday (July 27) after Russian-backed forces claimed to have captured it intact, but Kyiv did not confirm its seizure, saying only that fighting was under way nearby.

Seizing the Soviet-era coal-fired Vuhlehirsk power plant in eastern Ukraine would be Moscow's first strategic gain in more than three weeks, in what it calls its "special operation" to demilitarise and "denazify" its neighbour.

Rising energy prices and a global wheat shortage that threatens millions in poorer countries with hunger are among the far-reaching effects of Russia's war in Ukraine.

Russia reduced gas flows to Europe on Wednesday in an energy stand-off with the European Union.

It has blocked grain exports from Ukraine since invading on Feb 24, but last Friday agreed to allow deliveries through the Black Sea to Turkey's Bosphorus Strait and on to global markets. The deal was almost immediately thrown into doubt when Russia fired cruise missiles at Odesa, Ukraine's largest port, on Saturday, just 12 hours after the deal was signed.

Russian and Russian-backed forces have been struggling to make meaningful progress on the ground since their capture in early July of the eastern Ukrainian city of Lysychansk.

They have been repeatedly pushed back by fierce Ukrainian resistance to what Kyiv and the West regard as an imperialist Russian land grab in a pro-Western neighbour that Moscow dominated until the Soviet Union's 1991 break-up.

Ukraine's largest power plant in Zaporizhzhia, a nuclear-powered plant, was captured by Russia in March.

Unverified footage posted on social media appeared to show fighters from Russia's Wagner private military company posing in front of the Vuhlehirsk power plant, which some Russian state media - citing Russian-backed officials - reported separately had been stormed.

One of the Wagner fighters in front of the plant shows his watch to the camera - the time on it is 10.01am local time and gives the date as July 26. Reuters could not immediately verify the video or whether the plant had switched to Russian control.

The same unverified footage showed that working parts of the power plant, which is perched on the shore of a huge reservoir, appear to be undamaged.

Ukraine did not confirm the power plant's capture and only said that "hostilities" were under way in two nearby areas. It said on Monday that "enemy units" had made some gains around the plant.

British military intelligence said on Wednesday that Wagner fighters had probably succeeded in making tactical advances in the Donbas region of eastern Ukraine around the power plant and the nearby village of Novoluhanske.

It said some Ukrainian forces had probably withdrawn from the area. Mr Pavlo Kyrylenko, governor of Ukraine's Donetsk province that forms part of the Donbas, said at least one person had been killed by a Russian strike on a hotel in the town of Bakhmut, which is north of the power plant and a target which Russian forces have said they want to capture.

"According to preliminary information, there are dead and wounded; a rescue operation is under way," Mr Kyrylenko wrote on Facebook.