Ukrainian authorities have halted all cargo traffic with separatist-held areas in the east of the country, demanding that pro-Russian rebels hand back businesses they have seized.

President Petro Poroshenko on Wednesday called an emergency meeting of the country's security and defence council to ask it to implement the ban.

The decision "is dictated by the necessity to prevent the destabilising of the situation in the country, which is being undermined by political operators", he told the council.

"Our wish is to prevent social strife," he said.

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All railway and road connections will be cut, according to Oleksandr Turchynov, the council's secretary.

He said the suspension will remain in place until rebels hand back control of a number of Ukraine-registered businesses and comply with a 2015 peace agreement.

Financial burden

Separatists have sought to take control of some Ukrainian assets in their territory in response to a rail blockade by a group of Ukrainian activists that has also caused problems for the Ukrainian government due to its squeeze on strategic coal and steel supplies.

The cargo ban is expected to put additional pressure on Ukraine's economy, which is already facing potential rolling blackouts and monthly economic losses of up to four billion hryvnias ($150m) from an existing rail blockade by activists and some Ukrainian politicians, according to the government.

The central bank has warned that expected economic growth could nearly halve this year to 1.5 percent if rail traffic between the two territories does not resume.

The trade squeeze has highlighted the complicated economic relationship between the two sides and represents a new phase in a periodically violent standoff that has killed more than 10,000 people in the last three years.