By Leonardo Bennasatto and Lisi Niesner
CHASIV YAR, Ukraine (Reuters) - Ukrainian forces held out in the eastern city of Bakhmut against Russian attackers on Thursday, while the top U.S. diplomat told Russia's foreign minister in their first in person encounter since the invasion that the Kremlin must stop the war.
In Moscow, President Vladimir Putin said Russia had been hit by what he called a terrorist attack in its southern Bryansk region bordering Ukraine.
Putin vowed to crush what he said was a Ukrainian sabotage group that had fired at civilians. Russia's FSB security force said later that the situation there was "under control".
Near the front lines west of Bakhmut, in the Ukrainian-held town of Chasiv Yar, the thump of outgoing artillery fire could be heard on Thursday morning.
In nearby towns and villages, new trenches had been dug on the roadside 20-40 metres (65-130 feet) apart, a sign that Ukrainian forces were strengthening defensive positions west of the ruined city.
Residents trickled out of the area, carrying bags.
"We remained until the very last. We wanted to stay. But how can we? Our neighbour's flat has now been destroyed. It is time to go," Svitalana, 47, told Reuters journalists.
Bakhmut has been reduced to a blasted wasteland, with a few thousand of its 70,000 pre-war civilian population still inside as armies battle street-by-street.
Russian troops, bolstered by mercenaries of the Wagner private army, have been advancing north and south of the city to cut it off.
Moscow, which lost territory throughout the second half of 2022, says taking Bakhmut would be a step towards seizing the rest of the surrounding industrial Donbas region.
Ukraine says the city has limited strategic value but it is exhausting Russia's invasion force in what has become the bloodiest battle of the war.
"Sooner or later, we will probably have to leave Bakhmut. There is no sense in holding it at any cost," Ukrainian lawmaker Serhiy Rakhmanin said late on Wednesday. The aim was to "inflict as many Russian losses as possible".
In Washington, national security spokesman John Kirby said U.S. President Joe Biden and German Chancellor Olaf Scholz will discuss Ukraine's needed assistance when they meet on Friday at the White House. The United States will announce a new military aid package for Ukraine on Friday, Kirby said.
The year-long war dominated a foreign ministers' meeting in New Delhi of the G20 group of big economies, one of the last international forums involving senior Western officials where Russia is still invited.
A U.S. official said Secretary of State Antony Blinken spoke briefly to Russian Foreign Minister Sergei Lavrov on the sidelines and told him Washington would back Ukraine as long as necessary and that Moscow must cease the war.
The unscheduled encounter was not considered a formal meeting but was nonetheless the first time they had met face-to-face since Russia sent troops over the border into Ukraine on Feb. 24 last year.
A State Department spokesperson said the U.S. is not expecting further formal senior-level dialogue with Russia in the near term.
Earlier in New Delhi, Western powers urged the G20 countries to keep up pressure on Moscow to end the conflict.
"We must continue to call on Russia to end its war of aggression and withdraw from Ukraine for the sake of international peace and economic stability," Blinken told the meeting.
He was backed by his counterparts from Germany, France and the Netherlands.
Russia, which calls its actions in Ukraine a "special military operation", hit back. Lavrov accused the West of turning work on the G20 agenda into a "farce" and said Western delegations wanted to shift responsibility for their economic failures onto Moscow.
A raid into the village of Lubechanye near the border in Russia's Bryansk province was reported days after Moscow said Kyiv had attacked targets deep inside its territory with drones.
In videos circulating online, armed men calling themselves the "Russian Volunteer Corps" said they had crossed the border to fight "the bloody Putinite and Kremlin regime". Describing themselves as Russian "liberators", the armed men called on Russians to take up arms and rise up against the authorities. They denied firing on civilians.
Reuters could not verify the authenticity of the footage.
Putin, in a televised address, accused the group of opening fire on civilians in a car, including children.
Bryansk Governor Alexander Bogomaz said the attack had killed two people and wounded an 11-year-old boy.
Ukrainian presidential aide Mykhailo Podolyak called the Russian reports of the incident "a classic deliberate provocation". Moscow "wants to scare its people to justify the attack on another country & the growing poverty after the year of war," he tweeted.
But he also implied an attack was under way, carried out by Russian partisans. "Fear your partisans," he wrote.
In the southern city of Zaporizhzhia, Russian missiles crashed into a five-story apartment block overnight, collapsing upper floors.
Reuters journalists saw rescue workers carry the body of a man out of the wreckage. At least four people had been killed, police said. Evacuated residents, in shock, were being kept warm aboard a bus while crews tried to clear the debris.
(Reporting by Reuters bureaux; Writing by Peter Graff, Angus MacSwan and Grant McCool; Editing by Alex Richardson, Andrew Heavens and Diane Craft)