Vladimir Putin has called on Russian-backed insurgents in eastern Ukraine to "stop advancing" and urged the Ukrainian army to withdraw their troops from the region.

A day ahead of a Nato summit, Ukraine issued a vague statement about agreeing with the Russian president on ceasefire steps for eastern Ukraine.

The separatists rejected the move, saying no ceasefire was possible without Ukraine withdrawing its forces, while Mr Putin's spokesman claimed that Moscow was not in a position to agree to a ceasefire because it is not 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 tomorrow, with plans to approve a rapid-response team to counter the Russian threat.

Mr Putin, speaking on a trip to the Mongolian capital of Ulan Bator, was quoted by Russian news agencies as saying that Kiev must withdraw its troops and stop its artillery strikes.

"The warring parties should immediately co-ordinate and do the following things together," Mr Putin said. "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.

Mr Putin said he expected the final agreements between Kiev and the rebels to be reached at peace talks in Minsk, Belarus, on Friday.

Ukraine, Nato and the West have accused Russia of sending its troops and weapons to support the insurgents. Moscow has denied the charge. Associated Press reporters on the ground have run into numerous Russian fighters among the rebels and have seen large convoys of heavy military equipment driving in eastern Ukraine from the direction of Russia.

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 south-eastern Ukraine.

Fighting in eastern Ukraine has killed nearly 2,600 people and forced more than 340,000 to flee their homes, according to the UN.