President Putin and Ukrainian President Poroshenko meet in Milan and some 'first limited progress' is reported on their dispute over gas. But EU leaders say Russia has to do much more to prop up a fragile ceasefire in Ukraine. Ciara Lee reports.
Progress at last, Ukrainian President Petro Poroshenko says some decisions have been made with Vladimir Putin and the leaders of Germany and France. As well as reaching common ground regarding the upcoming Ukrainian local elections, they have also taken steps to resolve their dispute over gas supplies. Putin had previously warned that Russia will reduce supplies to Europe if Ukraine takes gas from the transit pipeline to cover its own needs. (SOUNDBITE) (Ukrainian) UKRAINIAN PRESIDENT PETRO POROSHENKO SAYING: ''We have made certain limited progress on the gas issue. We have agreed on the main parameters of the contract and we are now continuing talks on the resources to cover the deficit of the funds needed to finance the contract." But there were mixed feelings about the meeting on the streets of Donetsk. (SOUNDBITE) (Russian) DONETSK RESIDENT VALENTINA, SAYING: "To tell you the truth, I do not believe Poroshenko, because, you know, he says one thing but we realised that he is doing a totally different thing. We hear shelling every day. There was a ceasefire, but there is nothing new, no changes." Talks between the leaders earlier in the day had been described by the Kremlin as 'difficult and full of misunderstandings.' Europe wants Russia to do more to end violations of the ceasefire. It's imposed sanctions on Russia in response to its annexation of Crimea and its support for eastern Ukraine's separatists. The Russian rouble continued to fall this week despite ongoing interventions from the country's central bank. It spent $2.3 billion on Tuesday alone to prop up the currency, as it seeks to stem panic. Ideaglobal's Mike Gallagher says the EU-Russia dynamic remains a key worry. (SOUNDBITE) (English) Managing Director of Ideaglobal, Mike Gallagher "The market continues to underestimate the stance of Russia, and that can cause geo-political risks. Additionally the German economic slowdown, a large part of that is to do with trade sanctions. And the impact that has had on business and consumer confidence in Germany. So it is a big issue." Other sticking points during the the talks held on the sidelines of a Europe-Asia summit in Italy, included the use of unmanned drone aircraft over the borders between the two countries. Russia wants to have its drones taking part alongside those offered by France and Germany.