KIEV, Ukraine (AP) -- Russia and Ukraine said Wednesday they are working on a deal to halt months of fighting in eastern Ukraine, but Western leaders expressed skepticism -- noting it wasn't the first attempt to end the deadly conflict.
On the eve of a crucial NATO summit, Ukrainian President Petro Poroshenko's office said he and Russian President Vladimir Putin had agreed on steps for a cease-fire.
In a televised statement, Putin spelled out a seven-point plan for ending hostilities in eastern Ukraine, where Russian-backed separatists scored significant gains last week against government forces after four months of fighting.
Putin, speaking on a visit to Mongolia, said the rebels should halt their offensive and the Ukrainian government forces should pull back to a distance that would make it impossible for them to use artillery and rockets against residential areas. He also urged international monitoring of a cease-fire, a prisoners exchange and the delivery of humanitarian aid to war-ravaged regions.
Representatives of Russia, Ukraine, the rebels and the Organization for Security and Cooperation in Europe could finalize the peace deal as early as Friday, Putin said.
Poroshenko also voiced hope that Friday's talks in the Belarusian capital of Minsk would allow both sides to "take real steps to achieve peace."
He discussed the plan with German Chancellor Angela Merkel, saying it should include the OSCE monitoring of a cease-fire, the withdrawal of foreign troops, a buffer zone on the border and the release of all Ukrainian prisoners held in Russia, according to his office.
The Ukrainian leader met with Putin in Minsk last week, but they didn't announce any agreement after that session.
Ukrainian officials said the bodies of 87 soldiers had been retrieved from the area near the city of Ilovaysk, the scene of a horrific government defeat over the weekend. Ukraine and the West said the rebel offensive was spearheaded by regular Russian army units, an allegation Moscow has rejected.
President Barack Obama on Wednesday dismissed the Kremlin denials, saying that "Russian combat forces with Russian weapons in Russian tanks" were in eastern Ukraine.
Obama, on a trip to Estonia to reassure allies along Russia's border, said it was too early to say if the announced truce could hold, noting that "we haven't seen a lot of follow-up on so-called announced cease-fires."
Foreign Minister Frank-Walter Steinmeier of Germany, which has been pushing hard for a cease-fire, also was skeptical.
"What we have experienced today is, unfortunately, a bit of a repeat of the Minsk meeting -- there seem to be preliminary agreements, and then things come apart again," Steinmeier said in Hamburg. "It may be a small sign of hope, but whether it is good news will only become clear in the coming days."
Poroshenko announced a unilateral cease-fire in June, but it failed to stop the fighting, with Ukraine and the separatists blaming each other for violating it.
Obama left Estonia for Wales, where he and other Western leaders will attend a NATO summit that starts Thursday. The alliance is expected to approve plans to station more troops and equipment in Eastern Europe, with the aim of building a rapid response force that could deploy within 48 hours
Steinmeier hinted at some discord within NATO over Ukraine, saying: "I found that some things that came out of Brussels, from NATO headquarters, in these last few weeks weren't always helpful." But he added that it is Russia, not the alliance, that is responsible for the crisis in Ukraine.
At the same time, the European Union was preparing a new set of economic sanctions against Russia over its actions in Ukraine. EU leaders said over the weekend that the new punishment can be enacted in a week, but Putin now may hope to dodge the blow with the cease-fire deal.
The leaders of Britain, France, Germany and Italy will join Obama for Thursday's summit and are expected to discuss the potential for deeper economic sanctions on Russia.
Miroslav Rudenko, one of the rebel leaders, welcomed a cease-fire plan in remarks carried by the Interfax news agency, saying "there'll be no sense in a military solution to the conflict" if Kiev withdraws its troops.
Putin's demand for Ukrainian forces to pull out from the vicinity of populated areas in the east could be something that has already happened under the brunt of the latest rebel offensive.
Dmitry Trenin, director of the Carnegie Moscow Center, said a truce would be a victory for Putin.
"A cease-fire, in my view, is an important victory for Russia," Trenin told reporters. "And having secured a cease-fire, if it actually goes through, Russia will be bargaining from a position of strength, using the domestic political situation in Ukraine, the economic plight of the country, the social consequences from that plight."