Ukraine war latest: Kyiv and Moscow exchange prisoners of war

Ukraine played down comments made by Turkey’s president, who has adopted the role of mediator in the war, suggesting Kyiv and Moscow have made progress on four points of a peace plan.

Dmytro Kuleba, Ukraine’s foreign minister, said Kyiv is “sincerely grateful” to Recep Tayyip Erdogan for assistance, but he steadfastly denied the Turkish leader’s claims of progress reached in talks with Moscow.

“There is no consensus with Russia on the four points mentioned by the president of Turkey,” Kuleba said, adding that Ukrainian “is and will be the only” state language in Ukraine.

Speaking on his return from a Nato leaders meeting in Brussels, Erdogan told journalists “there seemed to be consensus” on four out of six key issues being discussed by the two sides.

Erdogan said Ukrainian president Volodymyr Zelensky had “begun to express” willingness to renounce the prospect of Nato membership, was “willing” to accept Russian as an official language of Ukraine, and had a “positive approach” on a potential security guarantee aimed at protecting the country from future aggression. He said a further issue, of disarmament, was more complicated and total disarmament was “out of the question”, but Kyiv was “willing to make clear concessions there as well.”

Kuleba said the classification of key topics of negotiations “into four or other points is incorrect” and “many different issues” are being discussed simultaneously by the subgroups of delegations.

The Ukrainian delegation “has taken a strong position and does not relinquish its demands,” Kuleba said. “We insist, first of all, on a ceasefire, security guarantees, and territorial integrity of Ukraine.”

Kuleba said Kyiv “will continue its dialogue” with Ankara and other mediators to “restore peace on Ukrainian soil.”

The Ukrainian president’s chief of staff treated with caution the notion that Russia may have dropped full-scale invasion plans to now focus on expanding the territory of its proxy separatist militants in the far eastern regions of Donbas.

“It’s a big danger before war is finished to make a public prognosis, especially when you are fighting against one of the biggest armies in the world,” Andriy Yermak said in response to a Financial Times question during a virtual meeting of the Washington-based Atlantic Council think-tank.

Yermak spoke shortly after Russia’s defence ministry announced it did not initially have plans to capture large swaths of the country, including capturing major cities like the capital Kyiv. Rather, the ministry claimed the plan was merely to weaken Ukraine’s military so it could focus on “liberating” its proxy breakaway enclaves of Donbas and expanding Russia’s territories to the administrative borders of Donetsk and Luhansk regions.

Yermak said, though, that one month into the war, Ukraine now has “very good chances to win” if it gets all the modern weapons it has asked the west for but not yet received, including longer range missiles and fighter jets.

“They thought their invasion into Ukraine will be an easy stroll,” Yermak said, pointing to losses inflicted upon Russia’s invading forces by Ukraine’s armed services.

“We will have to fight further . . . we cannot surrender neither territorial integrity or sovereignty,” Yermak said. “We won’t accept a compromise on Russia’s terms.”

The US signalled it is prepared to impose so-called secondary sanctions on individuals and businesses helping Moscow, from outside Russia, to evade the penalties imposed due to the war on Ukraine.

Germany will halve its dependency on Russian oil by the end of summer and wean itself off its gas by the middle of 2024.

As the EU works to limit dependence on Russian energy, the US will deliver at least 15bn cubic metres of additional liquefied natural gas to the EU market this year in conjunction with other suppliers around the world.

Russia has kept its gold holdings inside the country after losing access to nearly half of its $640bn of total reserves.

Turkey’s president Recep Tayyip Erdogan said he would urge Vladimir Putin to make an “honourable exit” from Ukraine by becoming an “architect” of a peace deal with Kyiv.

Putin personally approved Roman Abramovich’s involvement in Russia’s peace talks with Ukraine.

Moscow hit back at Biden’s call to remove Russia from the G20 group of major economies, putting forward a need to develop other ways to foster international relations.

Economic developments:

London Metal Exchange announced it will nearly double the size of the stability fund that ensures the safety of trading futures of base metals, following an unprecedented surge in nickel prices this month 

German business sentiment plummeted because of concerns the Ukraine war will push up inflation, intensify bottlenecks and create potential energy shortages

Petropavlovsk, a London-listed miner with headquarters in Moscow, was blocked from making a payment on one of its bonds because the UK targeted its main lender with sanctions

Moody’s Investor Services will withdraw credit ratings on Russian entities 

In stock markets, Europe’s Stoxx 600 is up 0.3 per cent. The US benchmark S&P 500 added 0.4 per cent and the Nasdaq Composite lost 0.1 per cent in early trading

Brent crude, the international oil benchmark, declined 1.8 per cent to $116.93 a barrel 

Military developments:

About 300 civilians were killed in a Russian bomb strike on a theatre this month that was used to shelter civilians in the port city of Mariupol 

Russia’s defence ministry said on Friday that its military action in Ukraine would now focus on the eastern Donbas region

Ukrainian forces have reoccupied towns near Kyiv, according to the UK ministry of defence, as logistic issues and local resistance stymied the progress of Russia’s invasion 

Ukraine’s military said Russian forces were regrouping in preparation for a new offensive and expected attacks on Brovary and Boryspil to envelop Kyiv from the east

Russian and Ukrainian military claims cannot be independently verified.

A Russian brigade commander fighting in Ukraine was killed by his own troops, a western official said, amid large losses of senior Russian soldiers during the invasion.

“We believe he was run over by his own troops,” the western official said, adding that it was understood to be deliberate. 

The killing of the commander of the 37th motor rifle brigade “gives an insight into some of the morale issues that the Russians are having,” the official said.

The western official also said a seventh Russian general, the head of the 49th combined arms army, had been killed.

Russia is assembling 10 new battalion tactical groups to be deployed to the war in Ukraine, a western official said citing intelligence assessments.

The new reinforcements are being drawn from eastern Russia, parts of Georgia occupied by pro-Russian separatists, and Russia’s Baltic Sea exclave of Kaliningrad, the official said.

Battalion tactical groups are the primary organisational structure for Russia’s army, and are typically comprised of about 700 troops plus multiple tanks, artillery and other vehicles.

Any additional deployments would come after more than a month of fighting in Ukraine, where Russia’s plan for a swift victory has failed amid tactical missteps, logistical errors and unexpectedly strong Ukrainian resistance.

Russia’s defence ministry said on Friday that its military action in Ukraine would now focus primarily on the eastern Donbas region, hinting that Moscow may be dialling down its ambitions in other parts of the country.

Russian troops had rapidly blocked Kyiv, Kharkiv and several other Ukrainian towns, the ministry was cited by the state RIA news agency as saying, as well as taking control of parts of the south. In doing so, the ministry said, Russian forces had distracted Ukrainian troops and restricted their ability to hinder Russia’s actions in the Donbas region.

“From the beginning we never planned to storm them,” a ministry representative was cited by RIA as saying, in reference to the targeted towns.

“Though we do not exclude this possibility . . . our forces and resources will be focused on their main aim — the complete liberation of the Donbas.”

The ministry said 1,351 Russian soldiers have died so far in the conflict, a number significantly lower than Ukrainian and international estimates.

Russian and Ukrainian military claims cannot be independently verified.

An initial count brings to about 1,000 the number of civilians killed in Ukraine in the month since Russia invaded but “intense fighting” in some cities limits the “full picture”, said the UN.

At least 1,035 civilians have been killed and 1,650 injured in the battles to control Ukraine that have been raging since February 24, Matilda Bogner, head of the human rights monitoring mission in Ukraine, said in a statement on Friday.

“I say ‘at least’ because we do not yet have the full picture of locations that have seen intense fighting, in particular Mariupol and Volnovakha,” she added.

Bogner said the extent of civilian casualties suggested the prohibition on indiscriminate attacks had “been violated”.

For example, 47 civilians were killed when two schools and several apartment blocks in Chernihiv were destroyed, she said. “All indications are that these were the result of Russian air strikes.”

“Mariupol Hospital No. 3 was destroyed and most likely this also was the result of a Russian air strike,” she added. “One injured woman was helped to deliver by caesarean section soon after the attack, but neither she nor her baby survived.”

Bogner said her team was investigating allegations of “indiscriminate shelling by the Ukrainian armed forces in Donetsk and in other territory controlled by the self-proclaimed ‘republics’”.

“These attacks cause immeasurable human suffering and may amount to war crimes,” she said. “They must stop.”

Washington is prepared to impose so-called secondary sanctions on individuals and businesses helping Moscow, from outside Russia, to evade the penalties imposed due to the war on Ukraine, the US national security adviser said.

Jake Sullivan’s comments to reporters on Air Force One as President Joe Biden travelled from Belgium to eastern Poland on Friday suggest the US is ready to widen the net of financial punishment around the world to ensure that Russia cannot find alternative ways to prop up its economy.

“We have a number of tools to ensure compliance, and one of those tools is the designation of individuals or entities in third party jurisdictions who are not complying with US sanctions or are undertaking systematic efforts to weaken or evade them,” Sullivan said.

He added: “We are prepared to use them if it becomes necessary.”

Sullivan’s threat came as the US and western allies are turning to enforcing the existing sanctions imposed on Moscow, in addition to considering more punitive measures. His words reflect concerns that Russia may find ways to damp their impact.

The adviser spoke as Biden was trying to rally western allies to maintain their unity in responding to the war on Ukraine, on the economic and the military front.

Sullivan said there had been “convergence” at a Nato summit in Brussels this week on how the alliance would respond to Russia’s possible use of weapons of mass destruction.

“We are working through contingency planning for a range of different scenarios,” Sullivan said.

“In broad terms, I believe that there is convergence around the fundamental nature of how the alliance would respond to these issues,” he added.

Biden was due to arrive in Rzeszow, in south-eastern Poland, for a briefing on the humanitarian response to the flow of refugees from Ukraine.

He said the US was concerned about a potential Russian attack directly on Poland and other eastern flank allies, including by bombing convoys of military equipment.

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Russia has kept its gold holdings inside the country after losing access to nearly half of its $640bn of total reserves, the central bank has said.

“All the gold from our gold and foreign exchange reserves is stored in the vaults of the Bank of Russia in our country,” the bank said in a statement on Friday.

The bank has been increasing the share of its reserves held in gold and renminbi in recent years and they now make up about half of the total, up from 35 per cent in June.

“To resist such [a geopolitical] crisis, reserves are needed that cannot be affected by the sanctions of western states,” the central bank said. “Therefore, in recent years, the Bank of Russia has increased the share of gold and the Chinese yuan to almost half of the reserves.”

As of February 1, gold accounted for 21 per cent of Russia’s gold and foreign reserves, according to the most recent data.

The bank said it has been significantly increasing its reserves since 2014, when the first financial restrictions were introduced on Russia after its annexation of Crimea.

Some $300bn of Russia’s reserves have been frozen after the central bank came under western sanctions in response to Moscow’s invasion of Ukraine, the country’s finance minister Anton Siluanov said this month. Russia responded with a restriction of the movement of funds that could be transferred to “unfriendly countries”.

The London Metal Exchange is to nearly double the size of the stability fund that ensures the safety of trading futures of base metals following the unprecedented surge in nickel prices on the exchange this month.

A notice sent to members of the LME’s clearing house on Friday said the fund for base metals would rise from $1.1bn to $2.075bn in April “due to a rise in stress testing losses in March”.

The exchange suspended trading in nickel on March 8 at just over $50,000 a tonne after a wild session in which the price breached $100,000

This was caused in large part when Chinese metals tycoon Xiang Guangda struggled to pay margin calls — demands for extra cash — on a huge bearish bet that backfired. The LME also cancelled several hours of trades, triggering a furious backlash from traders.

Clearing houses stand between two parties in a trade to help prevent the fallout from defaults rippling through the market. A default fund is a layer of defence employed by clearing houses as part of that protection.

Mariupol city council said the theatre, where civilians were sheltering, was bombed despite markings outside spelling out ‘children’ in Russian/Ukrainian © Planet Labs PBC/AFP via Getty Im

About 300 civilians were killed in a Russian bomb strike on a theatre this month that was used as a shelter in the Ukrainian port city of Mariupol, local officials have said.

“One wants to believe that everyone managed to escape. But the words of those who were inside the building at the time of this terrorist act say the opposite,” said Mariupol city council in a Telegram statement on Friday.

The city council said the bombing of the theatre happened despite clear markings in asphalt outside the shelter spelling out the word “children”.

The claims could not be independently verified. Earlier reports suggested that some civilians sheltering in the theatre survived.

Mariupol, a port city of 400,000 with two steel mills, has been largely reduced to rubble in weeks of Russian artillery and missile strikes.

Ukrainian officials have repeatedly accused Russia’s invading forces of blocking humanitarian corridors out of the city to government controlled towns, while forcefully deporting civilians to Russia.

“There can be no explanation for this inhuman cruelty,” said the council in its statement. “There will never be forgiveness for those who brought destruction, pain and suffering to our home.”

The US and the EU have reached a provisional deal on privacy requirements for tech companies sending data across borders, said US president Joe Biden and commission chief Ursula von der Leyen.

Pitching the framework as a sign of the strength of the transatlantic partnership, von der Leyen told reporters: “I am pleased that we found an agreement in principle on a new framework for transatlantic data flows. This will enable predictable and trustworthy data flows between the EU and US, safeguarding privacy and civil liberties.”

Biden said the framework underscores a shared commitment to privacy, data protection and the rule of law, adding that it would allow the European Commission to once again authorise transatlantic data flows that help facilitate $7.1tn in economic relationships with the EU.

The two presidents touted the arrangement and a separate deal on LNG shipments as indications of deepening co-operation at a time when the West is grappling with the war in Ukraine.

But any deal struck between Washington and Brussels is likely to face the scrutiny of the EU courts, which have set a high bar to the standards required for data to travel safely across the Atlantic.

Privacy activists, such as Austrian lawyer Max Schrems, are also likely to question how secure the new deal is.

An agreement of this kind has been successfully challenged previously. The European Court of Justice, Europe’s highest court, ruled in July 2020 that a transatlantic deal used by thousands of companies to move data between the EU and US does not offer enough protection for the privacy of EU citizens.

Russia has hit back at the US demand to exclude it from the G20 group of major economies, putting forward a need to develop other ways to foster international relations.

The Kremlin’s spokesperson recognised the importance of the G20 format but said, “when a large part of its members are in the state of economic war with us by their own initiatives”, leaving the group would be “nothing fatal”.

Dmitry Peskov’s comments came in response to US president Joe Biden calling to ban Russia from the group of international economic powers because of the conflict in Ukraine. Such a decision would demand a consensus from other members.

Russia would be “ready to take part if possible”, Dmitry Peskov said on Friday. If that’s not possible, “it’s nothing fatal”.

“We need to build other vectors in all areas of international relations,” said Peskov.

Russia has been pivoting its policies towards China, which has refrained from condemning the war in Ukraine. It has also received no criticism from African or Latin American countries, some which view Russia as an important partner.

“We know that the US continues moving along their rather pushy line to isolate Russia,” Peskov said.

“A large number of countries prefer a more balanced and sober approach to what’s happening. They prefer to ask questions via a direct dialogue. They may agree or disagree but they prefer not to cut ropes.”

Polls in Ukraine have suggested that 83 per cent of citizens want Ukrainian to be the only state language, and that fewer people than before want more Russian language rights.

The survey, released on Friday by Kyiv’s respected Rating Sociological Group, found that support for the Ukrainian language’s position as the only state language was widespread: “This opinion dominates in all macro-regions, age and language groups,” it said.

Meanwhile, support for Russian to be made an additional state language had dropped sharply from almost 25 per cent to 7 per cent since the start of the war, Rating found.

While Ukrainian is the official state language of Ukraine and is required in official documents, education and in correspondence by and with officials, many people, particularly in eastern and southern regions as well as in the capital city Kyiv, speak Russian in everyday life.

Many Ukrainians, particularly in rural regions, speak a mixture of Ukrainian and Russian commonly referred to as “Surzhyk”.

“Over the last decade, there has been a steady growth in the number of those who consider Ukrainian their mother tongue: from 57 per cent in 2012 to 76 per cent in 2022,” Rating said.

Turkey’s president Recep Tayyip Erdogan said that he will urge Vladimir Putin to make an “honourable exit” from Ukraine by becoming an “architect” of a peace deal with Kyiv.

Speaking as he returned from a summit of Nato leaders in Brussels, the Turkish leader said that he expected to speak to Putin over the weekend or at the start of next week.

“We should say [to Putin]: ‘Now, you must be the architect of the [next] step towards peace’,” he told reporters travelling with him on his plane, according to the pro-government Hurriyet newspaper. “We need to settle this matter by saying: ‘Make an honourable exit’.”

Turkey, a Nato member that has fostered close links with Moscow, has sought to play a role as a mediator in the conflict that erupted between its two Black Sea neighbours after Putin’s invasion of Ukraine last month.

German business expectations have deteriorated at a record rate in response to fears that Russia’s invasion of Ukraine will drive up inflation, intensify supply bottlenecks and create potential energy shortages, according to the country’s top business survey.

The monthly index of German business confidence produced by Munich’s Ifo Institute fell more than most economists had expected to 90.8, its lowest point since January 2021.

“Sentiment in the German economy has collapsed,” said Clemens Fuest, president of Ifo. “This was due to a record collapse in expectations of 13.3 points, which is even more than it fell at the outbreak of the coronavirus crisis in March 2020.”

Expectations worsened in all sectors of the economy and Fuest said German companies were “expecting tough times”. Companies’ assessment of the current situation was lower in the manufacturing and construction sectors, but stayed high in services and retail trading.

The economy contracted 0.3 per cent quarter-on-quarter in the final three months of last year. Economists feared the fallout from the Ukraine crisis could drag Europe’s largest economy into a technical recession, defined as two consecutive quarters of falling output.

“For the German economy, the risk of another contraction in the first quarter of the year and hence a technical recession is high,” said Carsten Brzeski, head of macro research at ING. “For the entire year, we have revised downwards our growth forecast to 1.6 per cent, which would delay the return of the economy to pre-pandemic levels to the end of this year.”

Germany aims to halve its dependency on Russian oil by the end of the summer and wean itself mostly off its gas by the middle of 2024, said the energy and economy minister.

Berlin, which is heavily dependent on Moscow’s fossil fuels, has been in a race to develop alternative energy sources amid pressure for an embargo and concerns that Russia could cut supplies.

“Now we expect that as early as the summer of 2024, we can be independent of Russian gas by all but a small portion,” said Robert Habeck on Friday. “By the end of the summer towards autumn, we will be able to do without Russian coal completely.”

The government has decreased its dependency on Russian coal imports from 50 per cent to 25 per cent, on oil imports from 35 per cent to 25 per cent, and on gas from 55 per cent to 40 per cent since the invasion of Ukraine on February 24, Habeck added.

He outlined plans to sign contracts to lease floating storage regasification units — vessels that can vaporise LNG. The units would have a volume of 27 gigawatts when completed. He did not say how many Germany aimed to obtain.

Germany is moving quickly to build two LNG terminals, one that can provide 10 gigawatts and another with 8-10 gigawatts of power.

“There’s a lot of momentum in other places as well, so that’s something moving significantly,” the minister said.

One problem for reducing oil dependency, he said, was that a third of oil imported in Germany goes to a refinery in Schwedt, which is owned by the state-backed Russian oil company Rosneft. The refinery lies in the eastern state of Brandenberg and also supplies Berlin.

“That situation is more complex and it is now proving that it was a mistake to give a Russian state company a responsibility,” he added, “for the supply of energy in this region and beyond.”

Habeck said the government was preparing itself for the possibility of Russia cutting supplies.

European equities drifted on Friday, on track to end the week slightly lower, as analysts questioned the sustainability of a rally earlier in the month that had wiped out the regional benchmark’s losses from the start of Russia’s Ukraine invasion.

The Stoxx 600, which is trading close to its level of February 23, the day before President Vladimir Putin launched the offensive against Russia’s neighbour, fell 0.2 per cent. London’s FTSE 100 slipped 0.1 per cent and Germany’s Xetra Dax declined by a similar margin. Asian shares were mixed, with Chinese bourses falling while Japan’s Nikkei 225 closed out its ninth day of gains as exporters were boosted by the weak yen.

The inflationary effects of the Ukraine war, which has pushed the price of Brent crude oil up by more than a fifth since February 23, have combined with the US Federal Reserve signalling interest rate rises to make investors “very bearish”, Barclays equity strategists said in a note to clients.

“Stocks have indeed recovered their losses since the war started, but the conflict remains unresolved, inflation is surging, central banks are even more hawkish,” said the Barclays team, led by Emmanuel Cau, head of European equity strategy.

Read more of today’s market briefing here.

The UK’s ministry of defence said Ukrainian counter-attacks helped the country “reoccupy towns and defensive positions”, as logistic issues and local resistance stymied the progress of Russia’s invasion.

“Ukrainian forces are likely to continue to attempt to push Russian forces back along the north-western axis from Kyiv towards Hostomel Airfield,” the MoD said in an intelligence briefing on Friday.

“Ukrainian counter-attacks, and Russian forces falling back on overextended supply lines, has allowed Ukraine to reoccupy towns and defensive positions up to 35km east of Kyiv,” the defence ministry added.

However, Ukraine’s military has warned that Russian forces are regrouping in preparation for a new offensive on the capital city.

In the south of Ukraine, “Russian forces are still attempting to circumvent Mykolayiv as they look to drive west towards Odesa,” but progress has been slowed by “logistic issues and Ukrainian resistance”, the MoD said.

The US aims to deliver at least 15bn cubic metres of additional liquefied natural gas to the EU market this year in conjunction with other suppliers around the world, as Washington and Brussels work to limit dependence on Russian energy.

The pledge was made as Joe Biden, the US president, met Ursula von der Leyen, the European Commission president, on Friday morning in Brussels on the second full day of his trip to Europe to rally allies to remain united in the face of the war in Ukraine.

The US commitment did not specify how much of the extra LNG would be coming directly from the US compared with other countries, highlighting the difficulty in rapidly increasing capacity and diverting contracts in the energy market.

However, the US said it expected there to be further increases above the 15bn cubic metre target in the future, according to a fact sheet released by the White House.

US President Joe Biden, pictured at the EU Council headquarters in Brussels this morning, met the European Commission’s president earlier © Bloomberg

Petropavlovsk has been thrown into turmoil after the Russian-focused producer was blocked from making a payment on one of its bonds when the UK targeted its main lender with sanctions.

The London-listed miner said it was prohibited from making a $560,000 interest payment due on Friday after the UK froze the assets of its main lender Gazprombank.

“The company is urgently considering with its advisers the implications for the group’s activities and financing arrangements resulting from Gazprombank being designated for the purposes of an asset freeze,” the company said in a statement.

Petropavlovsk, which mines gold in Russia’s far east and has its headquarters in Moscow, has “substantial commercial and financial relationships” with Gazprombank, the banking arm of the Russian gas group.

These include a $200mn loan and an $86.7mn revolving credit facility. As a condition of the loans, Gazprombank buys and sells all of the company’s gold production, which topped 500,000 ounces last year.

Petropavlovsk said the sanctions prohibited the sale of gold to Gazprombank, adding that the “restrictions on purchasing and selling gold in Russia may make it challenging to find an alternative purchaser”.

Russia’s central bank is buying gold for domestic producers but only in roubles.

Shares in Petropavlovsk have plunged almost 90 per cent since Russia’s invasion on February 24 of Ukraine, leaving the group with a market value of £70mn.

Russian gold company UGC, its biggest shareholder, this month dumped its 29 per cent stake. It was picked up by a Russian billionaire who part owns the sanctioned Credit Bank of Moscow.

The company was also ejected from the FTSE 250.

Vladimir Putin personally approved Roman Abramovich’s involvement in Russia’s peace talks with Ukraine, according to two people with direct knowledge of the matter.

Putin’s direct blessing indicates that Abramovich sought approval at the highest level to help start ceasefire negotiations between Kyiv and Moscow in late February and runs counter to long-running claims by the Russian businessman that he was never part of the Russian president’s inner circle.

After receiving Putin’s backing, Abramovich met a senior official from Ukrainian president Volodymyr Zelensky’s office to help set up the talks, three people said.

Since then, the two sides have started discussing a tentative plan to cease Russia’s invasion of Ukraine — although Ukraine and its western allies fear Moscow may be using the talks as a ploy to buy time for its troops to regroup and lead a renewed ground offensive.

Western officials briefed on the progress of the talks have cast doubt on whether Abramovich even played a role. Others have suggested he may have tried to overstate his efforts in an attempt to prevent becoming a target for western sanctions and losing control of his UK-based assets, including Chelsea Football Club.

Read more on Abramovich here.

Penniless and with just the clothes she was wearing, Elena Donets escaped “hell” in Mariupol when her apartment block was destroyed by Russian shelling.

Fleeing the besieged southern city that has been hit by the heaviest fighting since Russia’s invasion of Ukraine last month, the 52-year-old telecoms worker joined millions of other Ukrainians as part of one of the world’s largest and fastest-growing movements of internally displaced people this century.

“The last thing I remember are windows and iron doors blowing up. Some people were crushed and could not get out,” said Donets, showing a video of her burning home.

As she arrived to the sound of bomb sirens in Lviv, a city less than 100km from Ukraine’s border with Poland and about 1,000km from Mariupol, Donets said she had no idea what would happen to her.

A study by the International Organization for Migration released this week showed that 6.5mn people had been displaced within Ukraine since the beginning of Russia’s month-long war. This is in addition to the 3.5mn who have fled the country and are designated as refugees.

Internally displaced Ukrainians count for almost 12 per cent of the total number of internally displaced people in the world, taking Ukraine close to the figure reached in Syria after more than a decade of war.

Read more about Ukraine’s internal refugees

Displaced Ukrainians have lunch at the Resurrection New Athos Monastery in Lviv © AFP via Getty Images

Moody’s Investor Services, the credit rating agency, will withdraw its ratings on Russian entities, its parent organisation said late on Thursday New York time.

The withdrawal follows similar moves from fellow rating agencies S&P Global and Fitch this week, as well as the decision by Moody’s Corporation to suspend commercial operations in Russia this month.

The EU last week banned credit rating agencies within the block from rating Russian companies or clients as part of its fourth package of sanctions against Russia following its invasion of Ukraine.

Australia imposed new sanctions on Friday on Belarusian president Alexander Lukashenko and his family, as well as on members of the Russian media for their role in supporting Russia’s invasion of Ukraine.

Marise Payne, Australia’s foreign minister, said the government had placed sanctions on 22 “Russian propagandists and disinformation operatives”, including editors from state broadcaster Russia Today, the Strategic Culture Foundation, a think-tank, news agency InfoRos and Newsfront, a Russian website based in Crimea.

Alongside Lukashenko, Australia was also imposing sanctions on his wife Galina and their son Viktor.

Australia has been actively rolling out sanctions against Russia since it invaded Ukraine last month. It has now penalised 32 pro-Kremlin figures, Payne said.

Lukashenko, right, sits with his defence minister Victor Khrenin, centre, at a meeting with the latter’s Russian counterpart Sergei Shoigu. Both of the Belarusian men are now under Australian sanctions for their role in supporting Russia’s invasion © BELTA/AFP via Getty Images

The latest sanctions against Lukashenko and his family follow the sanctioning of 13 Belarusian individuals, including defence minister Viktor Khrenin. The Australian government said they “have played a role of significant strategic importance to Russia” by allowing it to launch attacks from within Belarus.

“Australia, in close co-ordination with our partners, will continue to impose further sanctions to inflict significant costs on those in Russia and Belarus who bear responsibility or hold levers of power,” Payne said.

Mexico’s central bank governor said on Thursday that the war in Ukraine risked triggering higher inflation, with the most obvious early price impacts in energy and grains.

Victoria Rodríguez Ceja, who took over as governor of the Bank of Mexico this year, said there was a high level of uncertainty about the war between Russia and Ukraine.

“Although its impact will depend on the magnitude of the conflict and its duration, we perceive that it implies upside risks to inflation,” she said at Mexico’s banking association’s annual conference in Acapulco. “Given the weight these countries have in energy and grains, the most immediate effect has been on the prices of those products.”

Mexico’s central bank on Thursday raised its key interest rate by 50 basis points, in a decision that President Andrés Manuel López Obrador leaked beforehand, raising concerns about the bank’s independence. He later apologised and said he thought the information was already public.

Inflation in the country was 7.29 per cent in the first two weeks of March, with analysts also recently revising down their growth estimates. Mexico has a particularly large car manufacturing sector, and disruptions in the supply of chips helped shave more than 1 per cent off its gross domestic product last year, analysts estimated.

The country’s finance minister also mentioned Ukraine as compounding the supply chain disruptions that have hurt the country’s economy.

“The political tension in Europe will prolong the interruption of some global value chains and will have effects on prices,” said Rogelio Ramírez de la O.

Two bids backed by US billionaires have become the frontrunners to win the £3bn race to purchase Chelsea Football Club, which is rushing to replace its Russian oligarch owner Roman Abramovich, who has been hit with sanctions.

The preferred bids are from an investor group led by Todd Boehly, the financier and owner of baseball’s Los Angeles Dodgers, and another led by Josh Harris and David Blitzer, the private equity billionaires who own sport teams including basketball’s Philadelphia 76ers, according to people with knowledge of the matter.

On Thursday, other bidders including Saudi Media Group were informed that they had been eliminated from the process, they said.

The unique circumstances of Chelsea’s sale have garnered strong interest for what is seen as a rare trophy asset in football’s most lucrative domestic division, the Premier League. The auction process for the club based in west London, England, is being managed by US merchant bank Raine Group.

Bids are being assessed based on a complicated set of criteria, including how much of the offer will be delivered to charity and how much funding will be available to invest in Chelsea and its stadium, those with knowledge of the matter said. The record of bidders in managing high-profile assets is also being assessed.

The frontrunners in the contest sought to distinguish their offers not only in terms of price but also by collaborating with members of the British establishment.

Read more about the bid for Chelsea Football Club here

US president Joe Biden warned that the US and its allies were prepared to respond “in kind” if Russia uses chemical weapons in Ukraine. 

Ukrainian president Volodymyr Zelensky urged G7 countries meeting in Brussels on Thursday to provide further modern weapons to Ukraine and intensify sanctions against Russia. 

G7 leaders agreed to crack down on Russia’s ability to sell its gold reserves to support its currency as the leaders of the group met at Nato headquarters on Thursday. 

UK prime minister Boris Johnson said there was evidence that Russia was already attempting to circumvent sanctions on its foreign reserves held in gold. 

The UK imposed further sanctions on Russia and individuals and organisations supporting the war in Ukraine, including the stepdaughter of Russian foreign minister Sergei Lavrov.

French president Emmanuel Macron announced the launch of an emergency food initiative to try to secure supplies for countries in need as a result of disruption in the grain market. 

The US said it will welcome 100,000 Ukrainian refugees and provide more than $1bn in new funding for humanitarian aid to people and communities affected by the conflict. 

Economic developments:

The International Energy Agency said Russia’s currency switch to roubles for European gas payments raised a security risk

Shares rose in Russia as the Moscow stock exchange reopened

Hedge funds have been scooping up beaten-down Russian and Ukrainian bonds

The European Central Bank will oversee the wind-down of Russia-linked, Cyprus-based RCB Bank

International grain trader Louis Dreyfus Group warned the Ukraine war could have a “material impact” on its operations in the region

BlackRock’s chief executive warned that Russia’s invasion of Ukraine will reshape the world economy and further drive up inflation by prompting companies to pull back from their global supply chains

In stock markets, Europe’s Stoxx 600 ended the day down 0.2 per cent. The US benchmark S&P 500 closed up 1.4 per cent and the Nasdaq Composite added 1.9 per cent

ICE Futures Europe increased margin requirements for Brent crude for the third time this year. Brent crude declined 2.1 per cent to settle at $119.03 on Thursday

Military developments:

Russia claimed control of eastern Ukrainian town of Izyum

Ukraine claimed to have sunk a large Russian naval landing vessel close to Mariupol

More than half of Ukraine’s children lost their homes because of the war, a UN agency said

Ukraine accused Russian forces of forcefully deporting thousands of local civilians of Mariupol to Russia

Ukraine and Russia conducted the first prisoners of war exchange since the invasion began.

Russian and Ukrainian military claims cannot be independently verified.

Ukrainian and Russian armed forces on Thursday conducted the first exchange of prisoners of war since Moscow launched its invasion of Ukraine one month ago.

“Today, by order of President [Volodymyr] Zelensky, the first full-fledged exchange of prisoners of war took place. In exchange for 10 captured occupiers, we pulled out 10 of our servicemen,” Iryna Vereshchuk, Ukraine’s deputy prime minister, said in a Facebook post.

“Also, today we sent 11 Russian civilian sailors to the Russians, whom we rescued from a sunken ship near Odessa,” Vereshchuk said. “As a result of this exchange, 19 Ukrainian civilian sailors are returning home from the rescue ship Sapphire, which was captured by the occupiers while trying to take our troops from Snake island. Under the terms of the exchange, the lifeboat itself will also be returned to Ukraine and sent to a port in Turkey.”

Russia’s human rights commissioner confirmed a prisoner swap had taken place, Interfax reported on Thursday.

“I can confirm the exchange of 10 Russian servicemen detained in Ukraine for 10 Ukrainian servicemen,” Tatyana Moskalkova told Interfax on Thursday.

Moskalkova also confirmed the exchange of the Ukrainian and Russian civilian sailors.

The development comes one day after Ukrainian officials denied claims by Russia that both sides had already conducted two exchanges of soldiers captured by each side.

Earlier this month, Ukraine transferred a group of Russian soldiers in exchange for Ivan Fedorov, the mayor of the Russian-occupied southern city of Mariupol. Fedorov was taken hostage by Russian armed forces after city residents held daily pro-Ukrainian protests against Russia’s invasion.

Ukrainian officials claim Thursday’s exchange was the first soldier-for-soldier swap by both sides.

Joe Biden: ‘The single most important thing is for us to stay unified’ © AFP via Getty Images

Joe Biden warned that the US and its allies were prepared to respond “in kind” if Russia uses chemical weapons in its invasion of Ukraine as he urged the west to sustain pressure on Vladimir Putin.

“It would trigger a response in kind,” the US president said at a press conference when asked whether the use of chemical weapons would trigger a military response from Nato, adding that the alliance would decide how to react “at the time”.

Biden was speaking after he met leaders of Nato members to debate the appropriate response to the possible use of weapons of mass destruction by Russia, as well as military aid for Ukraine and tighter sanctions on Moscow.

“The single most important thing is for us to stay unified” to prevent Putin from believing that Europe’s resolve would “crack” within a few months, Biden said.

The “maintenance of sanctions” and “increasing the pain” on Russia was crucial and the goal was to show that the west would “sustain what we’re doing”, he continued.

Biden also sought a common stance in the event China provided support for Russia.

“I had a very straightforward conversation with president Xi . . . I made it clear to him, I made no threats, but I made it clear to him that he understood the consequences of him helping Russia,” Biden said.

“I pointed out the number of American and foreign corporations that left Russia as a consequence of their barbaric behaviour . . . China understands that its economic future is much more tied to the west than it is to Russia.”

Read more about Biden’s warning to Russia here

British prime minister Boris Johnson said there was evidence Russia was attempting to circumvent international sanctions on their foreign reserves held in gold.

“On gold reserves, there is evidence that the Russians may be trying to get . . . around the sanctions on their gold,” Johnson told reporters after summits of Nato and G7 leaders on Thursday.

G7 leaders agreed earlier in the day to crack down on Russia’s ability to sell its gold.

“We are taking steps to make sure there is no leakage, no sale of their bullion into markets around the world. That’s what we are working on,” Johnson said.

French president Emmanuel Macron announced the launch of an emergency food initiative to try to secure supplies for countries in need as a result of the disruption caused by Russia’s invasion of Ukraine.

Russia and Ukraine are big grain exporters.

“We are entering into an unprecedented food crisis,” Macron told a news conference in Brussels after Thursday’s summits of Nato and the G7 group of big democracies. Without action, he said, “famine is inevitable”. 

The Food and Agriculture Resilience Mission, which Macron said he was launching with Senegal’s president Macky Sall, includes plans for the release of grain stocks and increased production around the world.

One aim would be to secure a multilateral commitment so countries did not continue to impose export bans that interfere with the international grain trade.