Heavy fighting has erupted between Ukrainian government forces and pro-Russian activists near the war-torn eastern town of Krasnyy Liman, BBC News reported.

News of the fighting came after President Petro Poroshenko talked of declaring a unilateral truce in the near future. He said on Thursday, June 19 that Ukraine would sign a historic association agreement with the EU on 27 June.

Meanwhile, Nato said Russia had moved troops back to the Ukrainian border.

Its secretary-general, Anders Fogh Rasmussen, said at least a few thousand soldiers had been deployed there, in addition to existing forces.

Poroshenko was elected president in May after six months of political turmoil which saw his elected predecessor, Viktor Yanukovych, ousted after he refused, at the last moment, to sign the EU association agreement and advocated closer ties with Russia instead.

Since then, Russia annexed part of Ukraine's territory, Crimea, and has also been accused of stoking the rebellion in the east.

According to a UN estimate reported this week, at least 356 people, including 257 civilians, have been killed in eastern Ukraine since 7 May.