MOSCOW - Russian President Vladimir Putin told rebels in Ukraine to halt plans for independence votes and said his troops have pulled back from the border, but his apparent change of heart received short shrift from Kiev and Washington.
Putin on Wednesday also hailed a planned May 25 presidential election in Ukraine - previously condemned by the Kremlin - as a "move in the right direction".
The surprise comments suggested a potential resolution of the conflict in Ukraine which has snowballed into Europe's worst standoff since the Cold War, as government troops battle to wrest back control of more than a dozen towns seized by the pro-Russia rebels.
Putin's new stance helped power rallies on financial markets in Moscow and New York. The United States and Europe have been preparing sanctions to hammer whole swathes of the Russian economy, which is teetering on recession, if the Ukraine presidential poll is scuppered.
But the White House and NATO said there was no sign of a Russian troop withdrawal, and Ukraine's Prime Minister Arseniy Yatsenyuk accused Putin of "talking through his hat" about the independence referendums, because they were illegitimate to begin with.
Putin ordered an estimated 40,000 troops to Ukraine's border two months ago, but said: "We have pulled them back. Today they are not at the Ukrainian border but in places of regular exercises, at training grounds." Putin told the separatists in Ukraine "to postpone the referendums planned for May 11 in order to create the conditions necessary for dialogue".
One of the separatist leaders, Denis Pushilin, said shortly after Putin's comments that his proposal would be looked into on Thursday.
Putin made his declarations after meeting Swiss President Didier Burkhalter, current chief of the Organisation for Security and Cooperation in Europe.
The Russian president's spokesman said afterwards that, if Ukraine now halted its military offensive and started dialogue, "then this can lead Ukraine out of a situation that at this stage is growing only worse".
But speaking to reporters on Air Force One, White House deputy spokesman Josh Earnest said "to date" there has been "no evidence that such a withdrawal has taken place".
Washington would "certainly welcome a meaningful and transparent withdrawal", he added. "That's something that we have sought for quite some time."
Western governments have been increasingly warning of "war" over the worsening violence, and thrown their full weight behind the presidential election called by Kiev's interim leaders as a crucial step to political stability after a pro-Russian president fled.
British Foreign Secretary William Hague said in Kiev after meeting Ukraine's new leaders that Russia had deployed covert fighters and "enormous propaganda" as part of "unacceptable pressure" to block the poll.
US President Barack Obama said last week that if Moscow prevented the election, he would order stepped-up "sectoral" sanctions. His administration moved Wednesday to cut trade benefits to Russia.
Putin has admitted his forces were active in Crimea ahead of the territory's annexation in March but denied their use in east Ukraine.
"I would like to stress that the presidential election planned in Kiev, while it is a move in the right direction, will not decide anything if all the citizens of Ukraine fail to understand how their rights are protected after the elections are held," he said.
Ethnic Russians who make up a large part of the population in the southeastern half of the ex-Soviet nation of 46 million had expressed fears about losing their language and other rights under a new pro-Western government that is likely to emerge after the vote.
Booby-traps in Slavyansk
Those concerns have fanned the insurgency, which is battling to win back strategic positions lost in recent days to the Ukrainian military.
Officials said 14 troops have been killed, 66 wounded and three helicopter gunships lost in the operation against the rebels, who are estimated to have lost more than 30 fighters.
Clashes and a resulting inferno in the southern port city of Odessa last Friday claimed another 42 lives, most of them pro-Russian activists, pushing the death toll over the past week to nearly 90.
Russia's Interfax news agency said pro-Moscow gunmen were trying to recapture the TV tower in the rebel-held town of Slavyansk from soldiers who overran it at the start of the week.
Ukrainian officials say they are moving cautiously towards the centre of Slavyansk, which has a population of more than 110,000, to avoid civilian casualties.
The interior ministry said it had information that the rebels had booby-trapped the buildings they occupied in the town with explosives.
Putin's remarks came ahead of commemorations of the Soviet victory over German forces in World War II on Friday, when he will oversee a display of military might in Moscow's Red Square.
Russian officials and state television have increasingly portrayed Kiev's actions as akin to Nazi-style fascism, while Ukraine sees a revival of Soviet aggression.