Ukraine rejected a Russian ultimatum to surrender the besieged southern city of Mariupol on Monday, as renewed overnight shelling killed at least eight people at a shopping mall in the capital Kyiv.

Almost 350,000 people are trapped without water and electricity in the port city of Mariupol, which has been bombarded by Russian troops for almost a month in what has been described as a "massive war crime" by EU policy chief Josep Borrell.

Elsewhere in Ukraine, Russian bombs struck targets overnight, allegedly damaging a chemical plant in the north of the country causing an "ammonia leakage" that sparked a temporary alarm.

Ukraine's President Volodymyr Zelensky urged Europe to significantly dial up pressure on Moscow to halt its nearly month-long invasion, saying the continent must cease all trade with Russia.

"No euros for the occupiers. Close all of your ports to them. Don't export them your goods. Deny energy resources. Push for Russia to leave Ukraine," Zelensky said in his latest video address.

Ukrainian leaders also stressed they were standing firm against invaders in Mariupol, which is suffering a critical humanitarian crisis.

Defenders of the port city have "played a huge role in destroying the enemy's plans and enhancing our defence," said Ukraine’s Defence Minister Oleksiy Reznikov.

"Today Mariupol is saving Kyiv, Dnipro and Odessa. Everyone must understand this."

The Kremlin's military command had warned authorities in Mariupol had until "5am... on March 21" to respond to eight pages of demands, which Ukrainian officials said would amount to a capitulation.

Rejecting the ultimatum by Russia to surrender Mariupol, Ukraine's Deputy Prime Minister Iryna Vereshchuk said Moscow should instead allow the trapped residents to escape.

"We can't talk about surrendering weapons," Vereshchuk told the Ukrainska Pravda online newspaper.

Mariupol is a pivotal target in Vladimir Putin's war in Ukraine -- providing a land bridge between Russian forces in Crimea to the southwest and Russian-controlled territory to the north and east.

A Greek diplomat who remained in the city through the bombardment said the devastation would rank alongside history's most ruinous wartime assaults.

"Mariupol will be included in a list of cities in the world that were completely destroyed by the war, such as Guernica, Stalingrad, Grozny, Aleppo," Manolis Androulakis, believed to be the last EU diplomat to leave the city, as he arrived back in Athens late Sunday.

Oil embargo warning

Russia marched on its neighbour on February 24, pressing on despite sweeping unprecedented sanctions imposed by Western allies.

Its bombs hit several targets across the country overnight, laying waste to a shopping mall in Kyiv, whose mayor announced a new curfew from late Monday to Wednesday morning. 

In the north, Ukrainians were told to temporarily take shelter after an ammonia leak at a nearby chemical factory, amid intense fighting with Russian forces in the area.

Sumy regional governor Dmytro Zhyvytsky said "Russian artillery shelling" had hit the Sumykhimprom fertiliser plant as he warned residents within a 2.5 kilometres (1.5 miles) radius to seek shelter before an all-clear was sounded mid-morning.

Away from the frontlines, foreign ministers of the European Union gathered in Brussels to mull fresh sanctions against Russia.

Some members within the bloc are pushing for an embargo on Russian oil and gas, but Germany has rejected the call outright, warning it could spark social instability.

The Kremlin on Monday heaped on the warnings against such a ban, saying it would have a direct impact on everyone. 

"Such an embargo will have a very serious impact on the world energy market, it will have a very serious negative impact on Europe's energy balance," said Kremlin spokesman Dmitry Peskov 

Energy prices and supply security issues will be on the table at an EU summit on Thursday in Brussels, to be also attended by President Joe Biden. 

The US leader will also join in a NATO summit and G7 talks in Brussels, before travelling to Poland on Friday.

There he is expected to hold talks with President Andrzej Duda to discuss a joint response to the humanitarian crisis that has seen more than two million Ukrainians flee to Poland alone.

Humanitarian conditions continued to deteriorate in the mostly Russian-speaking south and east, where Russian forces have been pressing their advance, as well as in the north around Kyiv.

Aid agencies are struggling to reach people trapped in besieged cities.

Around 10 million Ukrainians have fled their homes, roughly one-third going abroad, the UN refugee agency said.

'Act of terror'

The humanitarian crisis remains most acute in Mariupol. 

In his video message on Sunday, Zelensky had accused Russia of bombarding a Mariupol school sheltering hundreds, calling it an act of "terror that will be remembered even in the next century".

"Russian forces have come to exterminate us, to kill us," he said.

It was the latest potentially devastating strike on a shelter for civilians. Last Wednesday, a theatre where authorities said more than 1,000 people had sheltered was hit, with hundreds still presumed missing in the rubble.

Mariupol officials have said occupying forces have forcibly transported around a thousand residents to Russia and stripped them of their Ukrainian passports -- a possible war crime.

A group of children stuck in a Mariupol clinic for weeks are among those who have been taken to Russian-controlled territory, a carer and a relative of a clinic worker told AFP.

The 19 children, aged between four and 17 and mostly orphans, had been living in freezing cellars hiding from shelling in harrowing conditions.

'Perhaps in Jerusalem'

Amid the carnage, Zelensky has again suggested he and Putin hold direct talks.

After addressing Israeli lawmakers Zelensky -- who is accused by Russia of being a Nazi, but is Jewish -- thanked Prime Minister Naftali Bennett for efforts to broker talks, which he suggested could take place in Jerusalem.

"Sooner or later we could start the conversation with Russia. Perhaps in Jerusalem. This is the right place for finding peace. If this is possible," Zelensky said.

Authorities in Turkey, where Russian and Ukrainian representatives have been negotiating, said the two sides were close to a deal to stop the fighting.

But the Ukrainian leader appeared to draw some red lines.

"You cannot just demand from Ukraine to recognise some territories as independent republics," he told CNN. "We have to come up with a model where Ukraine will not lose its sovereignty."