Confusion Over Ukraine 'Permanent Ceasefire'

Vladimir Putin says a ceasefire deal between Ukraine and pro-Russian rebels could be reached by Friday.

The Russian President's announcement comes after conflicting reports that a permanent ceasefire agreement had been reached by the two sides this morning.

Following witness reports of loud artillery explosions near the Ukrainian city of Donetsk, the country's President Petro Poroshenko modified his statement to remove the word "permanent".

Mr Putin and Mr Poroshenko were unable to agree when they met last week

It is unclear whether his actions were in response to reports of the explosion.

Reporting from Mariupol, Ukraine, Sky's Moscow Correspondent Katie Stallard said: "It's extremely unclear at this stage what exactly this ceasefire is supposed to be.

"No one we have spoken to on the ground seems to know about it.

"The Ukrainian president issued a statement this morning claiming he agreed with Vladimir Putin to a permanent ceasefire in the region.

"He has since slightly modified that statement and removed the word 'permanent'.

"A spokesman for President Putin said no such agreement has been reached, nor can it, because Russia is not a party to the conflict."

Mr Putin's spokesman Dmitry Peskov was earlier quoted as saying the leaders' views "overlap to a considerable degree".

"The heads of state exchanged opinions about what needs to be done first in order to bring an end to the bloodletting in the southeast of the country as soon as possible," said Mr Peskov.

A statement from Kiev said an understanding had been achieved which would enable the "establishment of peace".

The conflict will be at the top of the agenda at the Nato summit in Wales

News of the development was greeted with an immediate rally on the financial markets - the main Russian stock exchange, the Micex, rising 4% and stocks in London with the FTSE 100 reached a 14-year high in morning trade.

Russia later announced it was to hold major military exercises in September of the forces responsible for its long-range nuclear capability. The drills will involve more than 4,000 servicemen and 400 technical units. 

Meanwhile, world leaders have begun arriving in the UK ahead of a two-day Nato summit in Wales where the Ukraine crisis will be top of the agenda. 

Speaking in Estonia ahead of the summit, President Obama said that Nato would not accept what he called Russia's illegal annexation of Crimea.

In a thinly-veiled warning to President Putin, the US President added that the Baltic states were bound by the Nato alliance.

"We have a solid duty to each other. Article Five is crystal clear; an attack on one is an attack on all," he said.

Mr Obama added the US was working to bolster the security of Nato allies and increase America's military presence in Europe.

"It would mean more US forces, including American boots on the ground continuously rotating through the Estonia, Latvia and Ukraine militaries."

Russia has repeatedly denied claims its soldiers were recently sent into eastern Ukraine to support Ukrainian pro-Russian rebels.

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