The leaders of Russia and Ukraine have agreed to work on the adoption of a bilateral ceasefire between separatists and Ukrainian authorities as well as quickly setting up effective border controls, the French president's office has said.

The statement followed a telephone conversation between German Chancellor Angela Merkel, Russia's Vladimir Putin, Ukraine's Petro Poroshenko and French President Francois Hollande.

Mr Putin and Mr Poroshenko also agreed to work on the liberation of more hostages and prisoners and the organisation of "substantial tripartite negotiations," Mr Hollande's office said.

Mr Petro had urged Mr Putin yesterday to strengthen Russian control over its borders to prevent militants and arms entering Ukraine after violence broke a truce there.

A ceasefire, declared by Mr Poroshenko on 20 June to allow for peace talks with the pro-Russian rebels, was due to expire today.

Mr Putin again urged an extension of the ceasefire in eastern Ukraine and setting up a control mechanism to monitor the truce with the participation of the OSCE security body, the Kremlin said in a separate statement after the talks.

"The leaders spoke in favour of convening a third round of consultations between Kiev and southeastern regions as soon as possible," it added.

The European Union has warned it could impose more sanctions on Moscow unless pro-Russian rebels act to wind down the crisis in the east of the country by today.

The EU signed a historic free-trade pact with Ukraine on Friday.