Ukraine’s President Petro Poroshenko says he has agreed with Russian President Vladimir Putin by phone on a “permanent ceasefire” with rebels.
“Their conversation resulted in agreement on a permanent ceasefire in the Donbass region [the regions of Donetsk and Luhansk],” his office said.
The Kremlin said Mr Putin had not agreed to the ceasefire himself as Russia was not party to the conflict.
US President Barack Obama is meeting Baltic leaders ahead of a Nato summit.
He is in the Estonian capital Tallinn with President Toomas Hendrik Ilves of Estonia and the leaders of Latvia and Lithuania, all former Soviet states which joined Nato a decade ago.
The Nato summit in Wales is expected to back plans for a rapid response force.
More than 2,600 civilians and combatants have been killed and more than a million people have fled their homes since fighting erupted in eastern Ukraine in April, when pro-Russian separatists there declared independence.
Russia has denied accusations by the West and the Ukrainian government that it is sending troops and military equipment over the border to support the separatists, who recently gained the upper hand against government forces.
The peace agreement was announced by Mr Poroshenko’s office in a statement on the president website.
“They reached a mutual understanding on steps leading to peace,” it said.
In a statement (in Russian), the Kremlin said a phone conversation had taken place on Wednesday between the two presidents in which their points of view had “coincided significantly” on possible ways to end the crisis.
Mr Putin’s spokesman, Dmitry Peskov, told Russian news agency Ria-Novosti: “Putin and Poroshenko did not agree a ceasefire in Ukraine because Russia is not party to the conflict, they only discussed how to settle the conflict.”
At a news conference with President Ilves, Mr Obama said Estonia would “never stand alone”.
Mr Obama is also due to meet Lithuania’s Dalia Grybauskaite and Latvia’s Andris Berzins.
The BBC’s Europe editor Gavin Hewitt says the three former Soviet states have been unsettled by President Vladimir Putin’s insistence that Russia has a right to intervene to defend the interests of Russian speakers.
The White House said Mr Obama would use his trip to Estonia, where about 25% are ethnic Russians, to make it clear that it is “not okay for large countries to flagrantly violate the territorial integrity of their smaller neighbours”.
In another development, the death of a Russian photojournalist in Ukraine last month has been confirmed.
Rossia Sevodnya news agency photojournalist Andrei Stenin was killed on 6 August in a Ukrainian government ambush on a convoy of rebels and refugees near Donetsk, Russia’s Investigative Committee announced. His charred remains have only now been identified. BBC
