Russian President Vladimir Putin and Ukrainian President-elect Petro Poroshenko have called for a quick end to the bloodshed in eastern Ukraine, Russian officials have said.
The two leaders were meeting for the first time since Mr Poroshenko's election, at a D-Day event in France.
Mr Putin also spoke briefly to the US president, the White House said.
Fighting continues, with government forces reportedly launching a tank attack near rebel-held Sloviansk.
The Ukrainian authorities have announced an "active phase" of what they call an anti-terrorist operation in and around Sloviansk, which was seized by pro-Russian militants several weeks ago.
The BBC's Steve Rosenberg, who was near the town on Thursday, says it was clear Ukrainian forces had encircled it and moved in a lot of weaponry.
Separately, Ukrainian media reported that one member of the security forces had been killed and several wounded in a mortar attack outside the city.
The three leaders are said to have chatted for about 15 minutes, in between a photo for world leaders and a meal organised by French President Francois Hollande.
"During the brief conversation, both Putin and Poroshenko called for a quick end to the bloodshed in south-eastern Ukraine, and also to military activity by both sides", said Kremlin aide Dmitry Peskov.
"It was also confirmed that there is no alternative to settling the situation by peaceful political means."
"The conversation took place on possible measures to de-escalate [the crisis], including how Moscow could recognise the election of Poroshenko," a French official said.
"The details of a ceasefire will also be discussed in coming days."
The White House later said that Mr Putin and Mr Obama had had an "informal meeting" lasting about 10-15 minutes.
Germany is cautious about expanding sanctions against Russia.
Mrs Merkel told a summit of the G7 states in Brussels this week that further sanctions would take effect only if there had been "no progress whatsoever".
Targeted sanctions were introduced by the EU and US after Russia annexed the Ukrainian territory of Crimea in March, following a controversial referendum on joining Russia.
Since then, a bloody insurgency has gripped Ukraine's eastern provinces of Donetsk and Luhansk, on the Russian border.
Pro-Russian separatists there have declared independence from Ukraine, refusing to recognise the pro-EU government which replaced President Viktor Yanukovych after he was ousted in February.
Mr Putin denies military involvement despite the fact that Russians are fighting with the rebels.
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