Ukraine's government has said its troops have killed five "terrorists" in operations to take back the pro-Russian stronghold of Slovyansk, an operation which has prompted Russia to order new military exercises on the Ukrainian border.

The Ukrainian interior ministry said on Thursday that the pro-Russian rebels were killed as paratroopers took over three "illegal checkpoints" around the town, which has been in separatist control for almost two weeks.

Videos posted online showed smoke rising from barricades around the town. Reports said that rebels had set fire to the barricades as they abandoned them and retreated from Ukranian forces.

The Reuters news agency reported that Ukrainian troops had set up new positions around the town. The AFP agency said that Ukrainian forces had told pro-Russian rebels to leave government buildings they were occupying, although this was not confirmed by any other source.

The operation prompted Russia to order new military exercises in regions bordering Ukraine.

NATO has estimated its deployment at 40,000 troops.

"We are compelled to react to such a situation," Defence Minister Sergei Shoigu told Russian news agencies.

"From today, military exercises have started in regions bordering Ukraine involving battalions of tactical forces of the southern and western military districts."

President Vladimir Putin had warned earlier on Thursday that there would be consequences if the Ukraine army was used against pro-Russian activists.

"If Kiev really began to use the army against the country's population... that is a very serious crime against its own people," he said.

The operation came hours after the government reported that its forces had taken control of the town hall in the city of Mariupol, and repelled an attack on an army base in the eastern town of Artemivsk, the ministries said.

Separatist sources also reported the loss of the town hall in Mariupol. The city was the scene of a rebel attack on troops last week that left three rebels dead. The separatists had held the town hall since April 13.

"The town hall is liberated and can function normally," Arsen Avakov, Ukraine's interior minister, said on his Facebook page.



The Defence Ministry said in a statement that Ukranian forces repelled nearly 100 separatists in an attack on the military base in Artemivsk, just north of rebel-held Donetsk.



"The attackers were repelled and suffered significant losses," Oleksandr Turchynov, Ukraine's acting president, said.

US President Barack Obama said on Thursday that Russia had failed to abide by the spirit of a deal to ease tensions in Ukraine, and that new sanctions against Russia were being "teed up".

He said "malicious armed men" continued to occupy buildings in eastern Ukraine, in contradiction to a deal agreed last week in Geneva by Ukraine, Russia, the EU and the US.

"So far we have seen them not abide by the spirit or the letter of the agreement in Geneva," Obama said.

If that continued, he said, "there will be further consequences and we will ramp up further sanctions".

On Wednesday Sergey Lavrov, the Russian foreign minister, warned that Russia would respond if its interests were threatened, and made reference to Russia’s invasion of Georgia in 2008 after Georgian forces attacked separatists in its pro-Moscow region of South Ossetia.