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Oct. 17 (Bloomberg) -- Russian President Vladimir Putin and Ukrainian President Petro Poroshenko sat on either side of Italian Prime Minister Matteo Renzi at talks this morning also attended by the leaders of Germany, France, Italy. Bloombergs Ryan Chilcote reports on Bloomberg Surveillance. (Source: Bloomberg)

German Chancellor Angela Merkel signaled a standstill on talks over Ukraine as European leaders met with Russian President Vladimir Putin in an effort to prevent the war from evolving into a frozen conflict.

After discussions over breakfast, U.K. Prime Minister David Cameron said Putin wants to prevent the crisis in Ukraine from growing into the kind of sustained dispute that Russia maintains in some former Soviet states. As leaders reconvened following an Asia-Europe summit, Merkel said the negotiations were stalled.

I cant yet see any breakthrough, Merkel told reporters in Milan following the ASEM meeting. Putin spokesman Dmitry Peskov said even with some progress, we note that some participants of this breakfast show a complete unwillingness to understand the real situation in the southeast of Ukraine.

Merkel joined Putin, Ukrainian President Petro Poroshenko, French President Francois Hollande and other leaders as they sought to shore up the cease-fire in eastern Ukraine and guarantee Europes natural gas supply this winter amid mutual recriminations. In the run-up to todays talks, Merkel said Putin must respect the terms of a September truce, while the Russian leader threatened to restrict the supply of natural gas to Europe.

Russian President Vladimir Putin, left, and Ukraine's President Petro Poroshenko meet on the sidelines of the ASEM summit of European and Asian leaders in Milan, northern Italy, on Oct. 17, 2014. Close

Russian President Vladimir Putin, left, and Ukraine's President Petro Poroshenko meet... Read More

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Russian President Vladimir Putin, left, and Ukraine's President Petro Poroshenko meet on the sidelines of the ASEM summit of European and Asian leaders in Milan, northern Italy, on Oct. 17, 2014.

Meetings between Putin and Western leaders do not appear to have achieved very much -- likely because Putin sees his position as one of strength and the West and Ukraine have to offer concessions to Moscow to secure a normalization of the situation on the ground in Donbas, Tim Ash, a London-based economist at Standard Bank Group Ltd., said today by e-mail.

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Putin in Milan Faces Down Criticism on Stoking Ukraine Crisis

Published October 17, 2014

Oct. 17, 2014: German Chancellor Angela Merkel, front left, Russian President Vladimir Putin, right, Italian Prime Minister Matteo Renzi, center, and French President Francois Hollande arrive for a meeting on the sidelines of the ASEM summit of European and Asian leaders(AP Photo/Daniel Dal Zennaro, POOL)

MILAN European leaders and Russia signaled cautious optimism over a peace deal for Ukraine after a high-level meeting in Milan on Friday, but emphasized details still need to be worked out.

European leaders are pressing Russian leader Vladimir Putin to fully respect a cease-fire deal signed last month in Belarus, which has reduced by not completely ended hostilities in eastern Ukraine.

European Commission President Jose Manuel Barroso said the leaders agreed the need to verify the cease-fire, to hold local elections in eastern Ukraine in compliance with Ukrainian law and to control the border areas.

He said further meetings would discuss how to implement the broad agreements.

One proposal being discussed on the sidelines by the Russian, Ukrainian and Italian foreign ministers is using drones to control the border areas, an Italian foreign ministry official said.

Italian Premier Matteo Renzi said he was "positive" following the nearly two-hour meeting bringing together Putin and Ukrainian President Petro Poroshenko with the leaders of Germany, France, Britain and Italy.

"We cannot accept an unstable Ukraine and so we will do all in our power to give back hope to Ukraine," Renzi told reporters.

Putin's spokesman Dmitry Peskov told reporters that the talks were difficult but constructive, adding that leaders of Russia, France, Germany and Ukraine will hold a separate meeting later Friday to continue the discussion.

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Europe signals progress on Ukraine

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