Russia has announced it was ordering troops back to base from the area near the border with Ukraine, apparently calling an end to a buildup of tens of thousands of soldiers that had alarmed the West.
The currencies of both Russia and Ukraine rose sharply after the announcement, signalling relief among investors just hours after Russia also ended war games in Crimea, the peninsula it occupied and annexed from Ukraine in 2014.
A confirmed pullout of the troops brought in on top of the permanent contingent will likely be welcomed by Western countries that had been expressing alarm at the prospect of further Russian intervention in eastern Ukraine. Russian-backed separatists have been fighting the Ukrainian government in the region since 2014.
The Ukrainian president's spokeswoman said this month that Russia had more than 40,000 troops deployed on Ukraine's eastern border and over 40,000 in Crimea. Around 50,000 of them were new deployments, she said. Moscow has not provided any troop numbers.
Zelenskyy welcomes 'steps to decrease military presence'
In a tweet, President Volodymyr Zelenskyy said Ukraine "welcomes any steps to decrease the military presence & deescalate the situation in Donbas (eastern Ukraine)," adding "Grateful to international partners for their support."
Foreign Minister Dmytro Kuleba had told Reuters Kiev did not know whether Moscow intended to launch an attack or not, and said the West must make clear it would stand with Ukraine if Russia did so.
"So it can go in either direction now," Kuleba said. "And this is why the reaction of the West, the consolidated reaction of the West, is so important now, to prevent Putin ... from making that decision."
US State Department spokesman Ned Price said Washington was aware of Russia's announcement and was watching the situation on the border closely. "We've heard words. I think what we'll be looking for is action," Price said.
Russian Defence Minister Sergey Shoigu said he had ordered troops involved in exercises to return to their bases by May 1, as they had completed what he called an "inspection" in the border area.
"I believe the objectives of the snap inspection have been fully achieved. The troops have demonstrated their ability to provide a credible defence for the country," Shoigu said.
Military hardware was to be left at a training ground near the city of Voronezh, about six hours' drive from Ukraine, so that it could be used again later this year in another big scheduled exercise.
Hours earlier, Shoigu had attended manoeuvres in Crimea, which Moscow said involved 10,000 troops and more than 40 warships. Russia also announced it had arrested a Ukrainian man in Crimea as a spy.
The troop buildup near Ukraine was one of several issues that have raised tensions between Russia and the West.
Sanctions, tit-for-tat expulsions
Last week, the United States tightened sanctions on Russia over accusations that it had hacked computers and meddled in US elections, and the Czech Republic accused Moscow of a role in deadly explosions at an arms dump in 2014.
Both countries expelled Russian diplomats, prompting angry denials and tit-for-tat expulsions by Moscow.
Western countries have also urged Russia to free jailed hunger-striking opposition figure Alexey Navalny, with Washington warning of "consequences" should he die in prison. Russia says the West should not interfere.
In a major speech on Wednesday, President Vladimir Putin sounded a defiant note, warning Western countries not to cross unspecified "red lines." But Putin is also participating this week in a climate summit organised by US President Joe Biden.
In Moscow, the Kremlin said Putin was aware of an invitation from Ukrainian President Zelenskyy to meet to discuss the crisis.
"If the president considers it necessary, he will reply himself. I have nothing to say on that now," spokesman Dmitry Peskov said.
'NATO remains vigilant'
Both NATO and Ukraine's Zelenskyy welcomed Russia's announcement, with the Ukrainian leader saying on Twitter that "the reduction of troops on our border proportionally reduces tension."
"Any steps towards de-escalation by Russia would be important and well overdue," said a NATO official.
"NATO remains vigilant and we will continue to closely monitor Russia's unjustified military build-up in and around Ukraine."
In Moscow, Putin said Zelenskyy was welcome in Moscow "any time."
"If President Zelenskyy wants to start repairing relations, then we of course welcome it," he said.
But the Russian leader also said that if Zelenskyy hoped to resolve problems stemming from fighting in eastern Ukraine, then he should first meet with leaders of the breakaway regions in Donetsk and Lugansk.
Zelenskyy had this week invited Putin to hold talks in Ukraine's east, saying millions of lives were at stake.
Putin 'playing games'
Timothy Ash, senior emerging markets strategist at London-based Bluebay Asset Management, said Putin was "playing games" and it was hard for the Ukrainian leader to accept direct talks with separatists.
"Everyone knows this is a state vs state conflict but Putin is trying to imply this is a civil war in Ukraine," Ash said.
Kiev said one more soldier had died of shrapnel wounds when "Russian armed forces" shelled Ukraine's positions on Thursday.
European security watchdog OSCE's monitoring mission in eastern Ukraine for its part sounded the alarm over "near-unprecedented restrictions and impediments to its ability to operate" and increased numbers of civilian casualties.
Some 30 Ukrainian soldiers have been killed since the start of the year, compared to 50 in all of 2020.
Concerns of Kiev and the West
The West and Ukraine have accused Russia of sending troops and arms across the border but Moscow has denied the claim.
Russia's troop buildup on the Ukrainian border led to concern in Kiev and the West of a repeat of Russia's 2014 aggression, when Moscow annexed the Crimean peninsula from Ukraine.
The EU estimated this week the number of Russian troops along the Ukrainian border at more than 100,000.
Shoigu has described the movement of Russian troops as training exercises in response to "threatening" NATO actions.
On Thursday, he said Russia was closely watching NATO activity including the massive Defender Europe 2021 exercises from the Baltic to the Black Sea.
Russia said last week it intends to close parts of the Black Sea to foreign military and other ships for six months beginning Saturday.
Kiev has been battling separatists in eastern Ukraine since 2014, with the conflict claiming more than 13,000 lives.