Russian financial markets rose strongly on Tuesday on a report that Russia was pulling back some troops from near the Ukrainian border, as German Chancellor Olaf Scholz flew into Moscow for Kremlin talks with President Vladimir Putin.
Russian shares and the rouble, which have been hit by fears of impending conflict, rose sharply after Russia's defence ministry said that some units in military districts adjacent to Ukraine were returning to their bases after completing drills.
It was not immediately clear if that was a tentative signal of any kind of significant pullback, reports Reuters.
Russian and Ukrainian government bonds also rallied sharply.
Britain, which with the United States has warned repeatedly that Russia could attack Ukraine at any time, reacted cautiously.
"The Russians have claimed that they have no plans for an invasion, but we will need to see a full scale removal of troops to show that is true," Foreign Secretary Liz Truss told LBC radio in an interview.
Ukraine's Foreign Minister Dmytro Kuleba said Kyiv would only believe that Russia was moving to de-escalate the situation if Ukraine itself saw that Russian troops were being pulled back. "If we see a withdrawal, we will believe in a de-escalation," Interfax Ukraine quoted him as saying.
Commercial satellite images taken on Sunday and Monday showed a flurry of Russian military activity at several locations near Ukraine, the private US company that released the pictures said.
US-based Maxar Technologies pointed to the arrival of several large deployments of troops and attack helicopters as well as new deployments of ground attack aircraft and fighter-bomber jets to forward locations.
Russia's defence minister said a day earlier that some military exercises were still ongoing, while others had ended and others were wrapping up. A joint exercise between Russia and Belarus is due to end on Sunday.
SCHOLZ MISSION
Germany's Scholz has said he will hammer home the message from Western govenrments that they are open to dialogue about Russia's security concerns but will impose sanctions if it launches a new attack on Ukraine.
The chancellor, who took office in December, travelled to Kyiv on Monday where he said Germany and its allies were ready for far-reaching and effective coordinated sanctions.
German sanctions could hit Moscow hard, but its position as Russia's number one trade partner in Europe and biggest consumer of Russian natural gas may also limit Berlin's room for manoeuvre.
Russia has built up more than 100,000 troops near Ukraine and carried out large-scale exercises. Russia denies planning to invade, but says it needs the West to take its security worries about NATO seriously.
"We will not invade Ukraine unless we are provoked to do that," RIA news agency cited Russia's envoy to the European Union, Vladimir Chizhov, as saying.
"If the Ukrainians launch an attack against Russia, you shouldn't be surprised if we counterattack. Or, if they start blatantly killing Russian citizens anywhere – Donbass or wherever."
The United States has warned Moscow may stage a "false flag" operation to trigger a war. Moscow has accused the West of hysteria.