Russian forces fully occupied the eastern Ukrainian city of Severodonetsk on Saturday, both sides said, confirming Kyiv's biggest battlefield setback for more than a month following weeks of some of the war's heaviest 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 Severodonetsk, 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 seek 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 counterattack.
President Volodymyr Zelenskyy vowed in a video address that Ukraine would win back the cities it lost. But acknowledging the war's emotional toll, he said: "We don't have a sense of how long it will last, how many more blows, losses and efforts will be needed before we see victory is on the horizon."
"The city is now under the full occupation of Russia," Severodonetsk Mayor Oleksandr Stryuk said on national television. "They are trying to establish their own order."
Kyrylo Budanov, Ukraine's military intelligence chief, told Reuters that Ukraine was carrying out "a tactical regrouping" by pulling its forces out of Severodonetsk.
"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 Russian forces had established full control over Severodonetsk and the nearby town of Borivske.
Not long after that, however, Ukrainian shelling from outside Severodonetsk forced Russian troops to suspend evacuation of people from a chemical plant there, Russia's Tass news agency quoted local police working with Russian separatist authorities as saying.
Oleksiy Arestovych, senior advisor to Zelenskiy, said some Ukrainian special forces were still in Severodonetsk directing artillery fire. But he made no mention of those forces putting up any direct resistance.
Russia's Interfax news agency cited a representative of pro-Russian separatist fighters saying Russian and pro-Russian forces had entered Lysychansk and were fighting in urban areas there.
Russia also launched missile strikes across Ukraine. At least three people were killed in the town of Sarny, some 300 kilometres west of Kyiv, after rockets hit a carwash and a car repair facility, said the local regional military administration.
Russia denies targeting civilians. Kyiv and the West say Russian forces have committed war crimes.
Seeking to tighten the screws on Russia, U.S. President Joe Biden and other Group of Seven 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.
A German government source said G7 governments also were having "very constructive" conversations on a possible price cap on Russian oil imports.