By Natalia Zinets and Sabine Siebold
KIEV (Reuters) - Ukraine's opposition leaders signed an EU-mediated peace deal with President Viktor Yanukovich on Friday, aiming to resolve a political crisis in which scores have been killed and opening the way for an early presidential election this year.
Under pressure to quit from mass demonstrations in Kiev, Russian-backed Yanukovich made a series of concessions to pro-European opponents, including a national unity government and constitutional change to reduce his powers, as well as bringing forward the poll.
"There are no steps that we should not take to restore peace in Ukraine," the president said in announcing his concessions before the agreement was signed. "I announce that I am initiating early elections."
Within hours, parliament voted to revert to a previous constitution slashing Yanukovich's prerogatives, sacked his interior minister blamed for this week's bloodshed, and amended the criminal code to pave the way to release his arch-rival, jailed opposition leader Yulia Tymoshenko.
With Ukraine caught in a geopolitical tug-of-war between Russia and the West, at least 77 people have been killed this week in the worst violence since the independent country emerged from the wreckage of the Soviet Union in 1991.
It was not clear whether the concessions would be enough to persuade protesters demanding Yanukovich's immediate removal to lift their occupation of Kiev's central square.
EU leaders and the White House praised what European Council President Herman Van Rompuy called a "necessary compromise", but there was no explicit endorsement of the accord in grudging comments from Moscow.
For now, the deal, mediated by the foreign ministers of Germany, Poland and France, appears to have been a victory for Europe in its competition with Moscow for influence.
The European envoys signed the document as witnesses, but a Russian envoy did not. The Russian envoy, Vladimir Lukin, acknowledged that Moscow had fallen behind the EU in the latest diplomacy: "The EU representatives were in their own way trying to be useful, they started the talks.
"We joined the talks later, which wasn't very right. One should have agreed on the format of the talks right from the start," Lukin was quoted as saying by Interfax news agency.
Nevertheless, EU foreign policy chief Catherine Ashton acknowledged that implementing the accord would be "very challenging". Ukraine is bitterly divided and near bankruptcy.
A Reuters correspondent at the signing in the presidential headquarters said Yanukovich, 63, a towering former Soviet regional transport official with two convictions for assault, did not smile during a ceremony lasting several minutes.
Opposition leader Vitaly Klitschko, a retired world boxing champion, switched his nameplate to avoid sitting next to the president.
Polish Foreign Minister Radoslaw Sikorski described the agreement as a "good compromise for Ukraine". In a post on Twitter, he said it "gives peace a chance. Opens the way for reform and to Europe". It fell to Sikorski to sell the deal to the skeptical opposition.
ITN Video filmed outside a meeting room during a break in the talks signed showed Sikorski pleading with opposition delegates to accept it: "If you don't support this, you'll have martial law, you'll have the army, you'll all be dead."
PROTESTERS STAND THEIR GROUND
Anti-government protesters remained encamped in Kiev's central Independence Square, known as the Maidan or "Euro-Maidan", and scene of the bloodshed this week.
Shortly after the signing ceremony, an open coffin carrying one of the dead from Thursday's violence, was borne across the square as a bare-chested drummer beat out a funeral tattoo with people chanting "Heroes don't die! Bandits out!"
Some car horns hooted and fireworks were lit to celebrate the accord, but many activists were suspicious, noting that Yanukovich had cut deals before and was still in office.
"He has to go today. We won't accept elections. He gave the order to kill, so how can we live with him now until December?" said Vasily Zakharo, 40, from the western Lviv region.
"That's our opinion and that's the decision of the Maidan."
Zakharo came to Kiev four days ago to join the uprising. He shaved, packed a bag, took a baseball bat and left a note for his wife. "I called her when I got here. She cried, of course."
Earlier in the day, armed police briefly entered the parliament building while lawmakers were in emergency session but were quickly ejected. Members traded punches when speaker Volodymyr Rybak tried to adjourn proceedings.
If fully implemented, the deal would be a severe setback for Putin, who had made tying Ukraine into a Moscow-led Eurasian Union a cornerstone of his efforts to reunite as much as possible of the former Soviet Union.
Alexei Pushkov, head of Russia's State Duma foreign affairs committee and a member of Putin's United Russia party, told Reuters the accord was positive if it ended the violence.
"But I don't think it resolves any of the core problems that Ukraine is facing: economics, ethnic relations and governability. The opposition is rather dissimilar, and now the opposition will start to squabble among themselves," he said.
Washington took a back seat in the final phase of negotiations after a senior U.S. official was recorded using an expletive to disparage EU diplomacy on an unsecure telephone line last month. A White House spokesman said the United States remained ready to impose further sanctions as necessary if the deal was not implemented.
The future of Ukraine's economy, heavily indebted and dependent on Moscow for energy imports, remains unclear. Putin promised $15 billion in aid after Yanukovich turned his back on a far-reaching economic deal with the EU in November, but Russia has not made clear whether it will still pay.
Ukraine cancelled a planned issue of 5-year Eurobonds worth $2 billion, it told the Irish Stock Exchange where the debt would have been listed. Kiev had hoped Russia would buy the bonds to help it stave off bankruptcy.
Ratings agency Standard & Poor's cut Ukraine's credit rating for the second time in three weeks on Friday, citing the increased risk of default. S&P said latest developments made it less likely that Ukraine would receive desperately needed Russian aid.
Russia's economy minister said Moscow was still undecided on the next $2 billion instalment and was awaiting clarity on the government in Ukraine.
On financial markets, Ukraine's dollar bonds and the hryvnia currency firmed against the dollar from record lows hit this week on hopes for a deal.
However, RBS analyst Tatyana Orlova noted the country was still in dire financial straits. "This is not the end of the story. What I am reading is there is a deal but the devil is in the detail ... The urgent need is for a technocratic cabinet that could take steps to avert default," Orlova said.
The health ministry said 77 people had been killed since Tuesday afternoon, which meant at least 47 died in Thursday's clashes.
On Thursday, EU foreign ministers meeting in Brussels agreed in principle to impose targeted sanctions on Ukrainian officials responsible for the violence and threatened more if the authorities failed to restore calm.
After the Kiev accord, Ashton said a decision on the future of sanctions would depend on what the EU foreign ministers on the ground in Ukraine reported.
(Additional reporting by Richard Balmforth, Alessandra Prentice, Vasily Fedosenko and Pavel Polityuk in Kiev, Sujata Rao in London, Alexei Anishuk in Moscow, Leigh Thomas in Paris, Marcin Goettig and Adrian Krajewski in Warsaw, Alexandra Hudson in Berlin; Writing by Paul Taylor and David Stamp; Editing by Peter Graff)