By Wa Lone

YANGON (Reuters) - A Myanmar military court has jailed seven soldiers for five years each with hard labor for murdering five ethnic minority villagers in June, state media said on Friday, in a rare prosecution of military personnel.

The seven, including four officers, will serve their time in civilian prisons, said a report from a court martial in northeastern Myanmar.

Soldiers have often been accused of serious human rights abuses in Myanmar's long-running wars with ethnic armed groups, but the allegations are rarely acknowledged, let alone heard in court.

Sai Kaung Kham, an activist who helped residents of northern Shan state's Mong Yaw village demand justice for the June killing of their family members, said he was surprised the military had taken action at all.

“The fact they have been sentenced to imprisonment is better than nothing," he said.

Myanmar's army ran the country for almost five decades before initiating a transition to civilian rule that saw Nobel laureate Aung San Suu Kyi take power in April.

Military leaders, keen to build military-to-military ties with Western armies, have made efforts to present the still-powerful army as a responsible partner in country's transition.

After the killings in Mong Yaw, one of the military's highest-ranking officers held an unprecedented news conference in July to say that soldiers were responsible for the deaths of five residents.

Lieutenant General Mya Tun Oo said at time the military would support the victims' families. [L4N1A63AJ]

Witnesses have told Reuters that soldiers entered Mong Yaw - populated mainly by members of the Shan and Palaung ethnic groups - on June 25 and rounded up dozens of men they suspected of aiding the Ta'ang National Liberation Army, a Palaung militia that has been fighting government forces in the area for several years.

Five badly beaten corpses were later pulled from shallow graves and identified as missing villagers.

The military has not accepted responsibility for the deaths of two other men killed fleeing the village on a motorcycle.

Suu Kyi urged U.S. businesses to invest in Myanmar on Thursday as a way to advance its democratic transition, a day after U.S. President Barack Obama pledged to lift long-standing sanctions.

(Additional reporting by Aung Hla Tun; Writing by Simon Lewis; Editing by Nick Macfie)