* Says exaggerated, misinformed reports used to whip up fear
* UN hoping to create environment for fair election on May 25
* No credible evidence for concerns among Russian-speakers
* UN says 121 dead, 140-150 missing in Ukraine unrest (Adds comments from news conference)
By Tom Miles and Stephanie Nebehay
GENEVA, April 15 (Reuters) - Ethnic Russians in eastern Ukraine have falsely claimed to be under assault to justify Russian intervention, the U.N. human rights office said on Tuesday in a report that warned of an impact on the May 25 election if propaganda persisted.
Russia declared Ukraine on the brink of civil war on Tuesday as Kiev said an "anti-terrorist operation" against pro-Moscow separatists was under way, with troops and armoured personnel carriers seen near a flashpoint eastern town.
The crisis began after protesters seeking closer Ukrainian ties with the West toppled its Moscow-backed president in February. Russia then seized and annexed Ukraine's Crimea region after its ethnic Russian majority backed the move in a referendum, which the West condemned as an illegal sham.
"Although there were some attacks against the ethnic Russian community, these were neither systematic nor widespread," the U.N. human rights office said in its report issued after two visits to the former Soviet republic last month by U.N. Assistant Secretary-General for Human Rights Ivan Simonovic.
"Photographs of the Maidan protests greatly exaggerated stories of harassment of ethnic Russians by Ukrainian nationalist extremists," it said, "and misinformed reports of them coming armed to persecute ethnic Russians in Crimea were systematically used to create a climate of fear and insecurity that reflected on support to integration of Crimea into the Russian Federation."
Gianni Magazzeni, head of the rights office's Americas, Europe and Central Asia branch, told a news conference that the report aimed to encourage an environment for free and fair elections in Ukraine on May 25.
"Many of the recommendations are aimed at that. Immediate recommendations are also to avoid any kind of incitement to hatred. And I think that this is important for those who are putting forward a narrative that does not correspond to the facts."
Magazzeni stressed Ukraine's duty to improve rule of law institutions, whose "weakness" he said had been an important root cause of recent events, along with corruption and poverty.
But he declined to single out Russia as a source of propaganda and disinformation, saying only that all states should refrain from incitement to hatred.
"I'm getting this question over and over," he said.
"The report is on the human rights situation in Ukraine. I think that every single member state has to abide by international human rights norms, treaties that they have ratified, the U.N. charter, I could continue."
The report also called for those responsible for 121 killings, including 101 at Maidan Square protests in Kiev, to be prosecuted so as to avoid a further escalation of tensions, especially in the restive east of Ukraine.
The report, which analyses events up to April 2, called for an urgent effort to uphold the rule of law, respect human rights and end so-called "hate speech" - such as nationalist rhetoric and advocacy of racial or religious hatred.
One right-wing group, the "Right Sector", which was involved in the Maidan protests in Kiev, had caused concerns for the Russian-speaking minority, according to the report.
There were numerous reports of Right Sector acts of violence against political opponents and representatives of the former ruling party, it said, and the group's alleged involvement in killings of law enforcement members should be investigated.
But it said that according to all accounts heard by the U.N. delegation, fear of Right Sector was disproportionate.
"We do not have any credible evidence of issues that would justify concerns on the part of the Russian-speaking population of Ukraine," Magazzeni said.
As well as the 121 killed between December and February, Magazzeni said the Ukrainian interior ministry was investigating the disappearance of a further 140-150 people, although he said the United Nations was seeking to verify reports that some had been identified and were no longer missing.
In Crimea, whose referendum on secession from Ukraine was held on March 16, there were "credible allegations" of harassment, arbitrary arrest and torture targeting activists and journalists who did not support the ballot.
U.N. officials had received "many accounts of vote rigging" in connection with the referendum, the report added. (Editing by Mark Heinrich)