Ukrainian president Petro Poroshenko said he and Russian president Vladimir Putin have reached agreement on a ceasefire in eastern Ukraine.
A brief statement from his office said “mutual understanding was reached regarding the steps that will contribute to the establishment of peace” but gave no details.
“The result of the conversation was agreement on a permanent ceasefire in the Donbass,” the collective term for the eastern Ukraine regions.
There was no immediate reaction from the Russia-backed separatists whom Ukrainian forces have been fighting since April. The rebels ignored a 10-day unilateral ceasefire that Mr Poroshenko had called in June.
Russian markets jumped on the news. The MICEX benchmark was 3% higher while the ruble rose 1.2% against the U.S. dollar.
Mr Putin’s spokesman said earlier that the Russian president and Mr Poroshenko had found in a recent discussion that they “largely share views” on ways out of the crisis.
Ukraine and the West have accused Russia of sending its troops and weapons to support pro-Russian insurgents who have been fighting government troops in eastern Ukraine since mid-April. Moscow has vehemently denied this charge.
That denial leaves unclear how effective the truce would prove to be. After a meeting with Mr Poroshenko last week, Mr Putin said no ceasefire was discussed because Russia was not a party to the conflict.
Over the weekend, the European Union leaders agreed to prepare a new round of sanctions that could be enacted in a week, after Nato accused Russia of sending tanks and troops into southeastern Ukraine. A Nato summit in Wales is also expected to approve measures designed to counter Russia’s aggressive actions in Ukraine.
Fighting in eastern Ukraine has killed nearly 2,600 people and forced over 340,000 to flee their homes, according to the UN.