A crucifix is tied on the main gun of a Ukrainian tank captured in the battle for Debaltseve at a workshop in the rebel stronghold of Donetsk on Thursday. Located in a factory that produces heavy machinery for the mining industry, the workshop has been repairing captured Ukrainian tanks, armored vehicles and self-propelled guns, as well as Donetsk People's Republic's army hardware for the past eight months. Photo: AFP

 European Union leaders are unlikely to reach agreement at their summit next week to prolong economic sanctions on Russia that expire in July, a senior EU official said on Friday.

New sanctions on Russia are also off the table for now because EU governments want to give a chance to a fragile cease-fire in eastern Ukraine.

But some of the EU's 28 member states had pushed for an early decision on extending sanctions on Russia's financial, energy and defense sectors adopted in July last year over Russia's annexation of Crimea and support for separatists in eastern Ukraine.

While leaders will discuss sanctions at next week's summit, the senior EU official said a majority would probably want to hold over discussion of renewing the economic sanctions on Russia until July.

"I don't think there is unanimity at all for the rollover of sanctions, the sanctions that are due in July," the official, briefing reporters on condition of anonymity, said.

Slovak Prime Minister Robert Fico said on Friday that new or extended EU sanctions against Russia would not help the cease-fire in eastern Ukraine.

The EU is divided on sanctions and Fico has in the past called them "meaningless and counterproductive."

Meanwhile, to juggle the need to resuscitate its crisis-hit economy against fears of rising inflation, Russia's central bank on Friday cut its main interest rate to 14 percent from 15 percent. The rate cut is the second since the start of the year after a mammoth increase in December that came as authorities scrambled to put a lid on economic turmoil sparked by Western sanctions over Ukraine and tumbling oil prices.

The bank said in a statement that it had "decided to reduce the key rate from 15 to 14 percent per annum taking into account that the balance of risks is still shifted towards a more significant cooling of the economy."

On Thursday, Russia started military exercises in the country's southern areas, as well as in Georgia's breakaway regions of South Ossetia and Abkhazia and in Crimea, annexed from Ukraine last year, Russia news agency RIA reported on Thursday, citing Russia's Defense Ministry.

More than 8,000 ground troops began drills set to last until early April in regions including southern Russia, Crimea, Armenia and the breakaway Georgian regions of South Ossetia and Abkhazia, defense ministry officials said.

The exercises are among the largest in recent times, the RIA Novosti news agency reported.

Russia's Black Sea fleet based in Crimea also began separate drills, using military planes to simulate an attack on its missile-carrying ships.

The navy also held exercises in the far eastern Sea of Japan and the far northern Barents Sea.

President Vladimir Putin last year ordered a series of snap drills in regions bordering Ukraine, and Moscow massed up to 40,000 troops along Ukraine's eastern border, according to NATO.

He has since been accused by the West of backing and arming separatist rebels in eastern Ukraine in a conflict that has left some 6,000 dead. The Kremlin denies this.

NATO is countering Russia by boosting its defenses on Europe's eastern flank with a spearhead force of 5,000 troops and command centres in the Baltic states, Bulgaria, Poland and Romania.

Russian state television aired what it said was footage of Putin working at his residence outside Moscow on Friday, the first appearance since he dropped out of sight days ago, triggering rumors he was ill or sidelined by internal conflict.