Russia And Ukraine Agree 'Permanent Ceasefire'

Russian President Vladimir Putin and his Ukrainian counterpart Petro Poroshenko have agreed a ceasefire to end the conflict in Ukraine, Kiev says.

"Mutual understanding was achieved concerning the steps which will enable the establishment of peace," a statement from Mr Poroshenko's press office said, after he and Mr Putin spoke by telephone.

Despite the announcement a deal had been reached, a spokesman for Mr Putin declared the deal was not technically a ceasefire as Russia was not party to the Ukraine conflict.

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

But Mr Putin's spokesman Dmitry Peskov was 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 few hours after the announcement witnesses said they heard loud artillery explosions on the northern outskirts of the eastern Ukrainian city of Donetsk.

News of the developments was greeted with an immediate rally on the markets - the main Russian stock exchange, the Micex, rising 4%.

The rouble also clawed back 1.3% against the US dollar, having fallen to record lows at the height of the crisis. Airline and banking stocks also rose in London with the FTSE 100 reaching a 14-year high in morning trade.

The news came as Russia 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 at the top of the agenda. 

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

At an address in Estonia today ahead of the summit, President Obama reminded journalists of America's military commitment to the region.

"In Ukraine earlier this year the United States increased our presence further," he said.

"We have contributed additional aircraft to the Baltic policing mission and we are continuously rotating personnel and aircraft through the Baltics."

Mr Putin and Mr Poroshenko met last week in Minsk but made no progress towards resolving the conflict, which has intensified in recent weeks as the West and Kiev accused Russia of deploying troops in Ukraine.

Foreign Secretary Philip Hammond recently warned that Nato must show it still has the political will to fight back in the event of a Russian attack on any member states.

Mr Hammond said: "For Nato to maintain its credibility in the future, we have to demonstrate that we maintain the political will to act to defend ourselves and our interests.

"We have to be clear that we have not lost the appetite to intervene when our interests or our obligations require us to do so."

Despite the claims, Russia has repeatedly denied its soldiers were sent into eastern Ukraine.

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