In the dead of night, Ukrainian troops and Russian-backed rebel forces on Friday exchanged 67 prisoners who had been captured during fighting in eastern Ukraine, part of a cease-fire deal that has struggled to succeed.

The transfer took place in the dark outside of the main rebel stronghold of Donetsk under the watch of international observers.

Thirty-six Ukrainian servicemen were released after negotiations, Ukrainian President Petro Poroshenko said. Ukrainian forces handed over 31 pro-Russian rebels detained over the five-month conflict, some of them Russian citizens.

The cease-fire took effect a week ago but has been routinely violated. Shortly after the prisoner exchange, a volley of rocket fire was heard in Donetsk.

The Ukrainian servicemen were driven away from local rebel headquarters around 1:30 a.m. and taken several miles north of Donetsk, where they were met by Ukrainian military officials.

The two sets of captives were brought out wearing handcuffs, which were removed as they were handed over. One representative from each side checked each prisoner against a list and crossed out their name as they were freed.

"There is an ongoing process of talks. We are meeting each other's demands and fulfilling our promises," said Yuriy Tandit, a negotiator for the government.

Darya Morozova, who is overseeing the prisoner exchange for the separatists, said she estimates around 1,200 rebels and their supporters are being detained by Ukrainian authorities. She said the rebels were holding several hundred Ukrainian troops, but when asked for an exact figure, she would only say it was "up to 1,000" people.

Morozova claimed the rebel prisoners had been poorly treated and some had not been fed for around two weeks. Another transfer of prisoners is expected in the next three days, she said.

Some of the separatists freed Friday were Russian citizens.

One of them, Simon Veridya from Moscow, said he was captured in the town of Kramatorsk, which was retaken by government forces in July.

"They shot at our ambulance. There were five of us, including two women. We were taken to custody in Kramatorsk" at the airport, Veridya said. "I was beaten and have two broken ribs."

The conflict between Russian-backed rebels and the Ukrainian government has been raging since mid-April, claiming more than 3,000 lives, according to the UN. Hundreds of thousands have been forced to flee the fighting.

Ukraine and the West have accused Russia of propping up the insurgency in eastern Ukraine with recruits and heavy weapons. Moscow has admitted that Russian volunteers were fighting across the border but denied sending the rebels weapons or troops.

In Brussels, the European Union toughened financial penalties on Russian banks, arms manufacturers and its biggest oil company, Rosneft, to punish Moscow for what the West sees as efforts to destabilize Ukraine.

The EU measures, which took effect Friday, broaden the scope of penalties imposed in July. They increase restrictions to Europe's capital markets, which further limits the targeted Russian companies' ability to raise money. They now also apply to major oil and defense companies, not only banks.

The EU sanctions forbid EU companies from engaging in new contracts in oil drilling, exploration and related services in Russia's Arctic, deep sea and shale oil projects. Russia's Rosneft is majority-owned by the state, but Britain's BP holds a 19.75 percent stake in it.

The sanctions also ban 24 more officials from traveling to the EU and freeze their assets there — including four deputy Parliament speakers and leaders of the separatists in eastern Ukraine. They also hit Sergei Chemezov, a chairman of a state-owned industrial giant and a former Soviet intelligence officer who served alongside Russian President Vladimir Putin during the Cold War.

Speaking in Kiev on Friday, European Parliament President Martin Schulz said the new sanctions signaled to Moscow that there is "no return to business as usual."

The United States is expected to announce a new round of sanctions against Russia later Friday for its actions in Ukraine.