* Moscow and Kiev say leaders find common ground
* Confusion after Kiev speaks of ceasefire
* Obama in Estonia on eve of NATO summit
* Russian announces exercise by nuclear forces
By Gareth Jones and Mark Trevelyan
KIEV/MOSCOW, Sept 3 Ukraine said on Wednesday
its president had agreed with Russia's Vladimir Putin on steps
towards a "ceasefire regime" in Kiev's conflict with pro-Russian
rebels, but the Kremlin denied any actual truce deal, sowing
confusion on the eve of a NATO summit.
"The parties reached mutual understanding on the steps that
will facilitate the establishment of peace," said a statement by
Ukrainian President Petro Poroshenko's office, replacing an
earlier statement that had spoken of a "permanent ceasefire".
Putin's spokesman said the leaders agreed on steps towards
peace but not a ceasefire in the conflict, which has killed more
than 2,600 people since April and provoked the worst crisis in
relations between Russia and the West since the Cold War.
"Putin and Poroshenko really discussed the steps that would
contribute to a ceasefire between the militia and the Ukrainian
forces. Russia cannot physically agree to a ceasefire because it
is not a party to the conflict," spokesman Dmitry Peskov said.
That position is disputed by Kiev and Western governments,
which say Russian troops are fighting alongside the pro-Moscow
Despite the confusion, the statements appeared to indicate a
degree of progress that could influence European Union leaders
as they consider introducing new sanctions against Russia as
early as Friday.
In a contradictory signal, Moscow simultaneously announced
plans for huge military exercises this month by the strategic
rocket forces responsible for its long-range nuclear weapons. It
said the manoeuvres in south-central Russia would involve 4,000
troops and extensive use of air power.
The timing was clearly calculated to throw down a challenge
to NATO and the United States, hours before President Barack
Obama was due to deliver a speech (1200 GMT) on the crisis in
Russia's neighbour Estonia.
Obama was expected to affirm the commitment of the United
States and NATO to defend its members in Eastern Europe in the
face of what they see as Cold War-style Russian aggression.
Russia denies any military presence in Ukraine, despite what
Western governments have called overwhelming evidence that it
has sent in troops and tanks to rescue the separatists from
defeat and enable them to turn the tide of the conflict.
"You want to talk provocative? Let's talk about a few
thousand Russian troops inside eastern Ukraine, continuing to
support separatists, with heavy weapon systems, and more than
10,000 troops arrayed along the southeast border with Ukraine,"
Pentagon spokesman Rear Admiral John Kirby said on Tuesday.
When he met Poroshenko in Belarus eight days ago, Putin had
said Russia would help to facilitate peace moves, but the actual
agreement of a ceasefire would be an internal matter for the
Ukrainian government and the rebels.
Initial reaction from the rebel side appeared sceptical
towards the possibility of any breakthrough.
A senior rebel leader said the separatists were sticking to
their demand for Ukrainian troops to withdraw from "our
territory" as the main condition for peace.
(Additional reporting by Gabriela Baczynska in Donetsk and
Lidia Kelly and Jason Bush in Moscow; Writing by Mark Trevelyan;
Editing by Will Waterman)