Putin's plan to end the war

Photo: The Canadian Press. All rights reserved.

A detainee held by Pro-Russian rebels lays bound meters away from a column of destroyed Ukrainian military vehicles in the village of Novokaterynivka, eastern Ukraine, Tuesday, Sept. 2, 2014. (AP Photo/Sergei Grits)

A day ahead of a NATO summit, Russian President Vladimir Putin issued his own peace plan for eastern Ukraine, calling on the Russian-backed insurgents there to "stop advancing" and urging Ukraine to withdraw its troops from the region.

Hours earlier, Ukraine had issued a vague statement about agreeing with Putin on cease-fire steps. The separatists rejected the move, saying no cease-fire was possible without a pullback by Ukraine, while Putin's spokesman claimed that Moscow was not in a position to agree to a cease-fire because it was not a party to the conflict.

The back-and-forth came as President Barack Obama arrived in Estonia in a show of solidarity with NATO allies who fear they could be the next target of Russia's aggression. NATO is holding a summit in Wales on Thursday, with plans to approve a rapid-response team to counter the Russian threat.

Putin, speaking in the Mongolian capital of Ulan Bator, said he came up with a 7-point peace plan on the plane trip there in which Kyiv must withdraw its troops and stop its artillery strikes.

"The warring parties should immediately co-ordinate and do the following things together," Putin said in televised comments. "The first thing is for the armed forces and insurgents of the south-east of Ukraine to stop active advancing in the Donetsk and Luhansk regions.

"Second is for the Ukrainian military to withdraw their troops at a safe distance that will make artillery and other strikes on populated areas impossible," he added.

Putin also urged an unconditional exchange of prisoners and said he expected a final agreement between Kyiv and the rebels to be reached Friday at peace talks in Minsk, Belarus.

The Interfax news agency later carried remarks from top rebel commander Miroslav Rudenko, who said "there'll be no sense in a military solution to the conflict" if Kyiv was to withdraw its troops.

Stock markets jumped on first reports of a possible cease-fire deal, but later eased back slightly. By early afternoon in Europe, Russia's MICEX benchmark was up 2.7 per cent, while the ruble rose 1.4 per cent against the U.S. dollar.

Germany's DAX index, which has been particularly sensitive to news regarding the Ukrainian crisis because of the country's economic ties with Russia, was up 1.2 per cent.

A rebel leader said earlier this week that they would respect Ukraine's sovereignty in exchange for autonomy. The rebels previously have called for full independence for their regions or possible absorption into Russia. Putin has ignored their calls for annexation — unlike in March, when Russia annexed Crimea.