* New round of Ukraine peace talks held in eastern city
* Ukrainian rebels free four OSCE hostages, four still held
* Four Ukrainian servicemen killed in fighting (Updates with end of talks)
By Aleksandar Vasovic
DONETSK, Ukraine, June 27 (Reuters) - Pro-Russian separatist leaders voiced willingness to extend a shaky ceasefire in Ukraine's Russian-speaking east on Friday, after releasing four out of eight international observers captured over a month ago, in an apparent goodwill gesture.
The ceasefire between the rebels and the government, set to expire later on Friday, has been marred by violations, including the death of five Ukrainian servicemen in overnight clashes and the downing of a military helicopter earlier this week.
Ukrainian President Petro Poroshenko, who declared the ceasefire as part of a peace plan to end fighting that threatens to dismember the ex-Soviet state, has not yet said whether he will prolong it past Friday's deadline.
He was expected to announce his decision late on Friday after returning to Kiev from Brussels where he signed a landmark free trade pact with the European Union.
The pact has been at the heart of months of upheaval in his country and his signature drew an immediate threat of "grave consequences" from Russia.
Russia, which opposes its neighbour's closer trade ties with the EU, annexed Ukraine's Crimean peninsula earlier this year after street protests in Kiev ousted the Moscow-backed Viktor Yanukovich from power.
Moscow on Friday said it would welcome the extension of the ceasefire in eastern Ukraine and renewed calls on Kiev to negotiate with the separatists rather than setting an "ultimatum" for them to lay down their arms.
A rebel leader in the eastern city of Donetsk said the ceasefire could be prolonged until Monday, after meeting a "contact group" of mediators including Ukrainian ex-President Leonid Kuchma, Moscow's ambassador to Kiev and representatives of the OSCE rights and security watchdog.
"We will maintain (the ceasefire) until June 30," Aleksander Boroday, "prime minister" of the self-styled Donetsk people's republic, told reporters.
He also held out the possibility of soon securing the release of the remaining four international OSCE observers captured by pro-Russian separatists while on a mission to monitor an earlier agreement to de-escalate the crisis.
A group of four OSCE monitors, detained by rebels just over a month ago, were freed in the early hours on Friday.
A first round of talks with the "contact group" was held last Monday and ended with a rebel commitment to honour a ceasefire earlier declared by government forces and which is due to end at 10 p.m. (1900 GMT) on Friday.
But the next concrete step in contacts between the two sides is not clear, with rebels demanding that Kiev withdraw its forces from eastern Ukraine as a pre-condition to peace negotiations.
Both sides accuse each other of breaching the ceasefire over the past week, threatening overtures toward a resolution of the conflict that has so far claimed hundreds of lives.
Four Ukrainian servicemen were killed and five wounded in an overnight attack by separatist fighters military base near Kramatorsk, a military analyst said. He had no estimate of casualties on the rebel side.
Dmytro Tymchuk, who has good sources among government forces, also said the rebels had staged night-time assaults on a number of other military posts, including near Slaviansk and Artemivsk.
The rebel leader Boroday in turn said they taken control of two checkpoints on the border with Russia, opening up key supply routes which Kiev says separatists are using to bring in arms and other war materials from Russia.
Securing military control over the 1,900 km (1,190 mile) border shared by Ukraine and Russia is key to Poroshenko's peace plan. Without it, he has said it would be impossible to find lasting peace. (Additional reporting by Aleksandar Vasovic in Donetsk and Pavel Polityuk in Kiev; Writing by Alissa de Carbonnel; Editing by Richard Balmforth and Robin Pomeroy)
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