US Secretary of State John Kerry says Russian troops are withdrawing from Ukraine

PARIS (AFP) - US Secretary of State John Kerry Tuesday said Russian troops were beginning to pull back from Ukraine but warned Moscow still needed to do more to see sanctions eased, as deadly shelling continued to undermine a fragile ceasefire.

Following more than three hours of talks with Russian counterpart Sergei Lavrov, Kerry laid down a series of conditions to lift sanctions over the crisis that has brought relations between the two to the lowest ebb since the Cold War.

"And at this point... many of them are happening now. The troops are pulling back, (but) the heavy equipment still has to be pulled back and the border is yet to be properly monitored and secured," Kerry told reporters in Paris.

Russian President Vladimir Putin - due to meet Ukrainian President Petro Poroshenko in Milan on Friday - on Sunday called back from the Ukrainian border 17,600 soldiers he had stationed there when Kiev's forces were making their most significant gains this summer.

Despite the tentative signs of progress in the months-old conflict that has claimed 3,400 lives, Ukrainian officials continued to talk tough, with the new defence minister vowing to build an army capable of withstanding Russian aggression.

Lawmakers confirmed National Guard chief Stepan Poltorak, one of Ukraine's most respected soldiers, as defence minister in a 245-1 vote earlier Tuesday.

Poltorak told lawmakers in a brief but combative address that his top priority was building a reliable defence against Russia through a brand new army that Kiev hopes to equip with NATO weapons.

"Ukraine needs peace, and only a modern, well-trained and well-supplied mobile armed forces can guarantee this peace," said the 49-year-old career military man.

But he also asked lawmakers to give him "time and support" - an appeal made more relevant by parliament's ability to dismiss ministers, in new rules that take effect after an October 26 election.

The size of the task before him was underscored by renewed violence in the southern port city of Mariupol, where shelling killed seven people in a funeral procession.

Kiev defence officials said the deadliest day since the ceasefire agreement on September 5 also saw seven troops lose their lives in sporadic attacks.

The crisis has seen the West impose a series of sanctions on Russia. But Lavrov insisted they were backfiring, eroding hopes of an economic recovery in Europe, and straining Washington's own ties with Brussels.

"We do not know who is losing out more in economic terms: Russia or the European Union," Lavrov said shortly before flying to Paris.

The sanctions have cut Russia's access to Western money markets and forced its biggest state companies to appeal for massive rescues that will further limit the government's ability to meet its social commitments.

They also threaten to tip Russia into recession and ensure that growth remains anaemic through the remaining four years of Putin's third term.

Speaking to reporters after his meeting with Kerry, Lavrov called on "all parties to respect" the ceasefire agreement and urged "the relaunch of political dialogue".

Kiev and its Western allies accuse Russia of fomenting the chaos in eastern Ukraine and covertly sending in special forces to pay back Ukraine's new leaders for their February ouster of a Kremlin-backed president.

A sense of public disbelief and fury at the mounting death toll and the humiliating performance of Ukraine's once-proud armed forces has set the backdrop for a crucial general election at the end of the month.

Poroshenko will rely on Poltorak to instill confidence in a demoralised military that has lost around 1,000 soldiers in its campaign to quash pro-Russian guerrillas in the economically vital rustbelt.

Former defence minister Valeriy Geletey submitted his resignation three months into his term after turning into a political liability for Poroshenko heading into the parliamentary vote.

Geletey bore the blame for allowing a contingent of Ukrainian soldiers to be trapped near the Russian border in late August by better-equipped insurgents.

More than 100 troops died after trying for days to hold off the attack without any support from nearby Ukrainian units.

The bloodbath soon prompted Kiev to agree to peace terms granting parts of the Russian-speaking east limited self-rule.