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Secretary of Ukraine's Security and Defence Council Oleksandr Turchynov attends the council's meeting in Kiev, Ukraine March 15, 2017. Mikhail Palinchak/Ukrainian Presidential Press Service/Handout via REUTERS


KIEV (Reuters) - Ukrainian authorities on Wednesday halted all cargo traffic with separatist-held territory in the east of the country and demanded that pro-Russian rebels hand back businesses they have seized.

President Petro Poroshenko called an emergency meeting of the Security and Defence Council to ask it to implement the ban.

The decision "is dictated by the necessity to prevent the destabilising of the situation in the country, which is being undermined by political operators," he told the council.

"Our wish is to prevent social strife," he said.

The suspension will come into force at 1100 GMT on Wednesday and remain until rebels hand back control of a number of Ukraine-registered businesses and comply with a 2015 peace agreement, the secretary of the Security Council, Oleksandr Turchynov, said.

The cargo ban will put additional pressure on Ukraine's economy, which is already facing potential rolling blackouts and monthly economic losses of up to 4 billion hryvnias ($150 million) from an existing rail blockade by activists and some Ukrainian lawmakers, according to the government.

The central bank has warned that expected economic growth could nearly halve this year to 1.5 percent if rail traffic between the two territories does not resume.

The trade squeeze has highlighted the complicated economic relationship between the two sides and represents a new phase in a periodically violent stand-off that has killed more than 10,000 people in the last three years.

(Reporting by Alexei Kalmykov and Pavel Polityuk; Writing by Alessandra Prentice; Editing by Matthias Williams and Mark Trevelyan)