Moscow signaled on Friday it was scaling back its ambitions in Ukraine to focus on territory claimed by Russian-backed separatists as Ukrainian forces went on the offensive, recapturing territory on the outskirts of the capital Kyiv.

In the first big sign that Western sanctions on Russia were impacting investment from China, sources told Reuters state-run Sinopec Group, Asia's biggest oil refiner, had suspended talks on a petrochemical investment and a venture to market Russian gas.

In the month since they launched their invasion of Ukraine, Russian troops have failed to capture any major city. An assault that Western countries believe was aimed at swiftly toppling President Volodymyr Zelenskiy's government was halted at the gates of Kyiv.

The Russians instead have been bombarding and encircling cities, laying waste to residential areas and driving around a quarter of Ukraine's 44 million people from their homes.

U.S. President Joe Biden was visiting Poland for a first-hand look at the refugee crisis. Poland has taken in more than half of the 3.7 million Ukrainians who have fled abroad.

Battlelines near Kyiv have been frozen for weeks with two main Russian armoured columns stuck northwest and east of the capital. A British intelligence report on Friday described a Ukrainian counter-offensive that had pushed Russians back in the east.

"Ukrainian counter-attacks, and Russian forces falling back on overextended supply lines, has allowed Ukraine to reoccupy towns and defensive positions up to 35 km east of Kyiv," the report said. Britain has provided Ukraine with weapons and military training.

In an announcement that appeared to indicate that Moscow may be switching to more limited goals, the Russian Defence Ministry said the first phase of its operation was mostly complete, and it would now focus on "liberating" two eastern regions claimed by Russian-backed separatists. read more

Volodymyr Borysenko, mayor of Boryspol, an eastern suburb where Kyiv's main airport is located, said 20,000 civilians had evacuated the area, answering a call to clear out so Ukrainian troops could counter-attack. Ukrainian forces recaptured a nearby village the previous day and would have pushed on but halted to avoid putting civilians in danger, he said.

On the other main front outside Kyiv, to the capital's northwest, Ukrainian forces have been trying to encircle Russian troops in the suburbs of Irpin, Bucha and Hostomel, reduced to ruins by heavy fighting over the past few weeks.

In Bucha, 25 km (15 miles) northwest of Kyiv, a small group of Ukrainian troops armed with anti-tank missiles was digging foxholes. Andriy told Reuters he had enlisted to defend the town as soon as the invasion began.

"I told my wife to grab the children and to hide in the basement, and I went to the drafting station and joined my unit straight away," he said. "My wife and children were under occupation for two weeks, but then they managed to escape through a humanitarian corridor."

BURIED IN FLOWERBED

Moscow calls its actions in Ukraine a "special military operation" to disarm its neighbour. Kyiv and its Western allies call it an unprovoked war of aggression and say Russia's true aim was to overthrow the government of what President Vladimir Putin regards as an illegitimate state.

Unable to capture cities, Russia has resorted to pounding them with artillery and air strikes.

Worst hit has been the eastern port of Mariupol, a city of 400,000 under siege since the war's early days. It is the biggest Ukrainian-held city in the territory Russia demands be ceded to the separatists.

Tens of thousands of people are still believed to be trapped inside with no access to food, power or heat, while the city around them has been reduced to ruins.

In a district captured by the Russians, one woman waiting in line to receive food supplies told Reuters her diabetic husband had slipped into a coma and died. He was buried in a flowerbed. read more

"We are planning on leaving but it's very difficult at the moment," the woman, who gave her name as Alexandra, said. "I can't leave my husband in a flowerbed."

Mariupol's city council for the first time gave an estimated death toll for the bombing of the main theatre on March 16, saying witnesses now said 300 people had been killed among many hundreds sheltering in the basement. Russia denies blame.

The United Nations said it was looking into reports of mass graves inside Mariupol, including one with at least 200 corpses.

The cities of Chernihiv, Kharkiv and Sumy in the east have also endured devastating bombardments. Chernihiv was effectively surrounded by Russian forces, its governor said.

In Kharkiv, officials said six people had been killed by the shelling of an aid distribution site at a supermarket. Video posted on the internet showed a blast striking a car park where scores of people were queuing. People fled in terror after the explosion. Reuters was able to confirm it was filmed outside a supermarket in Kharkiv.

CHINESE INVESTMENT SUSPENDED

Western economic sanctions on Russia have isolated it from global trade to a degree never before visited on such a large economy. China is the biggest power not to have condemned the Russian invasion and Washington has been putting pressure on Beijing to rebuff Moscow.

The Reuters report that Sinopec had suspended discussions about investments potentially worth $500 million was the first concrete sign that sanctions are interfering with trade between Moscow and Beijing.

Beijing has repeatedly voiced opposition to the sanctions, insisting it will maintain normal trade links. But behind the scenes, the government is wary of Chinese companies running afoul of sanctions, and pressing them to tread carefully.

"Companies will rigidly follow Beijing's foreign policy in this crisis," said an executive at a Chinese state oil company.

The West has ruled out intervening on the ground or answering Ukraine's plea for a no-fly zone but has supported Kyiv with hundreds of anti-tank and anti-aircraft weapons.