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Rostov region governor Vasily Golubev said 15 people suffered light injuries from shards in an explosion near the Chekhov Garden cafe in central Taganrog.
The top floor of the apartment building was almost completely destroyed.
A building belonging to Ukraine's security services (SBU) was also hit
The explosion sent a ball of orange flames and acrid black smoke skywards.
Regions bordering Ukraine have seen regular drone strikes and shelling since Moscow launched its military campaign in February last year, but have hardly ever been targeted by missiles.