WRAPUP 11-Putin's top ally in Ukraine arrested, say authorities

(Recasts with arrest of Kremlin ally Medvedchuk)

* Ukraine publishes photo of arrested opposition leader

* Kyiv and allies check reports of chemical weapons use

* Battle for Mariupol reaches decisive stage

* Russian troops mass for eastern offensive

By Maria Starkova

LVIV, Ukraine, April 12 (Reuters) - Ukraine on Tuesday said it arrested the Kremlin's most prominent ally in the country as Russian President Vladimir Putin gave his strongest signal yet the war will grind on, warning peace talks were at a dead end.

In February, Ukraine said Viktor Medvedchuk, the leader of the Opposition Platform - For Life party, escaped from house arrest after the authorities opened a treason case against him.

The pro-Russian figure, who says Putin is godfather to his daughter, has denied wrongdoing. On Tuesday a spokesperson was not immediately available for comment.

"Pro-Russian traitors and agents of the Russian intelligence services, remember - your crimes have no statute of limitations," Ukraine's security service posted on Facebook alongside a photo of Medvedchuk in handcuffs.

Operatives "conducted this lightning-fast and dangerous multi-level special operation", the head of the organisation Ivan Bakanov said.

A Kremlin spokesman was cited by the Tass news agency as saying he had seen the photo and could not say whether it was genuine.

Hours earlier Putin used his first public comments on the conflict in more than a week to insist Russia will "rhythmically and calmly" continue its operation, citing the need to achieve goals on security.

"That Blitzkrieg on which our foes were counting did not work," he said, batting aside the impact of sanctions and warning that on-and-off peace talks were in a "dead-end situation."

But he frequently seemed to ramble or stammer. Only occasionally did he adopt the icy, confident demeanour that has been his trademark in public appearances over more than 22 years as Russia's leader.

Putin, who had been ubiquitous on Russian television in the early days of the war, had largely retreated from public view since Russia's withdrawal from northern Ukraine two weeks ago.

On Monday he met the visiting chancellor of Austria.

But the meeting was held at a country residence outside Moscow and no images were released, a contrast from talks with Western leaders on the eve of the war, when they were pictured seated at opposite ends of a huge table in the ornate Kremlin palace.

MARIUPOL DENOUEMENT

Moscow's nearly seven-week long incursion, the biggest attack on a European state since 1945, has seen more than 4.6 million people flee abroad, killed or injured thousands and led to Russia's near total isolation on the world stage.