Ukraine has extended the ceasefire in its eastern region as the European Union inks a landmark free-trade agreement with the crisis-torn country.

Announcing a 72-hour extension of the week-long truce, Ukrainian President Petro Poroshenko expressed the hope that peace would prevail.

The original deadline which was set to expire at 22:00 local time (19:00 GMT) on Friday (27 June), has now been extended until Monday.

According to the president's website, the truce extension is part of the ongoing plan to take the pro-Russian separatists on board following discussions with top Ukrainian authorities including defence officials.

Although some of the pro-Russians have agreed to adhere to the ceasefire, others have rejected it.

The 30 June deadline was in line with the EU leaders' call for the rebels to lay down arms.

"We expect progress in the next hours. If we don't see any steps forward on any of the points then we are also prepared to take drastic measures," said German Chancellor Angela Merkel.

Poroshenko's announcement came shortly after he arrived back from the EU summit in Brussels.

Signing the high-profile political and trade accord, which sparked the present crisis, the Ukrainian leader hailed the pact as "historic".

"We are talking about possible sanctions against Russia but we do not have to introduce sanctions for the sake of sanctions. We do have a need for a dialogue. I hope this dialogue will take place and we will have a real ceasefire," Poroshenko told reporters in the Belgian capital.

Soon after the accord, Russia warned that Ukraine would face "grave consequences", saying the country runs the risk of splitting into two.