(Adds comments from intelligence services chief)

By Andrius Sytas

Feb 16 (Reuters) - Russia is continuing to move troops to the Ukrainian border and will likely launch a "limited" military attack against the country, the head of the Estonian Foreign Intelligence Service said on Wednesday.

The attack would include missile bombardment and the occupation of "key terrain" in Ukraine, said Mikk Marran, director general of the Estonian Foreign Intelligence Service.

"Right now, our assessment is that they would avoid cities with large populations, as it takes a lot of troops to control those areas. But there is no clear understanding of what avenue the Russian troops might exploit," he told a media briefing held to introduce the service's annual report.

Another possibility could be intensified fighting out of the two Russian-backed breakaway regions in eastern Ukraine, according to Estonian intelligence. Such escalation is "highly likely," and this way “Russia likely gets plausible deniability and avoids sanctions,” said Marran.

“If Russia is successful in Ukraine, it would encourage it to increase pressure on the Baltics in the coming years," he said. “The threat of war has become main policy tool for Putin.”

Estonian intelligence is aware of approximately 10 battle groups of Russian troops moving toward the Ukrainian border, where 100 Russian military battle groups, or about 170,000 soldiers, are already deployed, the intelligence chief said.

The numbers include soldiers usually deployed in regions around Ukraine, but also troops in Belarus which Russia sent for a military exercise near Ukrainian border.

Some of the soldiers are likely to stay in Belarus beyond the Feb. 20 end of the exercise, a significant worry for the NATO alliance which the Baltics belong to, said Marran. "That would reduce preparation time for an attack against the Baltics.” (Reporting by Andrius Sytas in Riga Editing by Chizu Nomiyama and Leslie Adler)