This screen grab obtained from a handout video shows Ukrainian service members walking in line in Mariupol. AFP

Ukraine has ordered its garrison in Mariupol to stand down, but the ultimate outcome of Europe's bloodiest battle for decades remains unresolved.

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Ukraine hopes to swap steel mill fighters for Russian POWs

Kremlin says Ukraine lacks will to continue peace talks

Top commanders of Ukrainian fighters who had made their last stand at the Azovstal steelworks in the port city are still inside the plant, according to the leader of pro-Russian separatists in control of the area, Denis Pushilin, quoted by local news agency DNA on Wednesday.

Ukrainian officials have declined to comment publicly on the fate of the fighters.

Ukraine President Volodymyr Zelensky speaks in Kyiv. File photo

"The state is making utmost efforts to carry out the rescue of our service personnel," military spokesman Oleksandr Motuzaynik told a news conference. "Any information to the public could endanger that process."

Ukraine confirmed the surrender of more than 250 fighters on Tuesday but did not say how many more were inside.

Russia said on Wednesday an additional 694 more fighters had surrendered, bringing the total number to 959. Its defence ministry posted videos of what it said were Ukrainian fighters receiving hospital treatment after surrendering at Azovstal.

Ukraine President Volodymyr Zelensky, the Red Cross and the United Nations were involved in talks, Mariupol Mayor Vadym Boichenko said, but gave no details.

Buses wait for Ukrainian servicemen to transport them from Mariupol to a prison on Wednesday. AP

Mariupol is the biggest city Russia has captured so far and allows Russian President Vladimir Putin to claim a rare victory in the invasion it began on Feb. 24.

Moscow has focussed on the southeast in recent offensives after pulling away from Kyiv, where, in a further sign of normalisation, the United States said it had resumed operations at its embassy on Wednesday.

The US Senate approved veteran diplomat Bridget Brink as ambassador to Ukraine, filling a post that has been vacant for three years.

Canada, Britain and others have also recently resumed embassy operations.

Moscow says it is engaged in a "special military operation" to demilitarise and "denazify" its neighbour. The West and Kyiv call that a false pretext for invasion.

Meanwhile, Finland and Sweden formally applied for NATO membership on Wednesday, a decision made in the wake of the Ukrainian invasion and the very kind of expansion that Putin cited as a reason for attacking Ukraine.

A NATO flag flutters in the wind outside NATO headquarters.

US Ambassador to NATO Julianne Smith called for an expedited accession process that could be "done in a couple of months", but NATO member Turkey said its approval depended on the return of "terrorists", namely Kurdish militants and Fethullah Gulen followers.

Finland and Sweden were both militarily non-aligned throughout the Cold War.

Although Russia had threatened retaliation against the plans, Putin said on Monday their NATO membership would not be an issue unless the alliance sent more troops or weapons there.

Russia could, however, cut off gas supplies to Finland this week, Finland's state-owned energy provider Gasum said.

The European Commission announced a 210 billion euro ($220 billion) plan for Europe to end its reliance on Russian oil, gas and coal by 2027.

Meanwhile, Google became the latest big Western company to pull out of Russia, saying its local unit had filed for bankruptcy and was forced to shut operations after its bank accounts were seized.

Reuters