'Outside of NATO': Russia and Ukraine hope for breakthrough in peace talks

New talk of compromise from both Moscow and Kyiv on a status for Ukraine outside of NATO lifted hope on Wednesday for a potential breakthrough after three weeks of war.

Ukraine's President Volodymyr Zelenskiy said negotiations were becoming "more realistic", while Russian Foreign Minister Sergei Lavrov said there was "some hope for compromise".

The Kremlin said the sides were discussing status for Ukraine similar to that of Austria or Sweden, both members of the European Union that are outside the NATO military alliance. Ukraine's chief negotiator said it would give Kyiv binding international security guarantees to prevent future attacks.

Though the war still ground on with Ukrainian civilians trapped in cities under Russian bombardment, the signs of compromise sent relief through global financial markets. Shares in Germany - Russia's biggest energy market - were up 3.4%.

Three weeks into the invasion, Russian troops have been halted at the gates of Kyiv, having taken heavy losses and failed to seize any of Ukraine's biggest cities in a war Western officials say Moscow thought it would win within days.

Ukrainian officials had expressed hope this week that the war could end sooner than expected. Talks were due to resume on Wednesday by video link for a third straight day, the first time they have lasted more than a single day.

"The meetings continue, and, I am informed, the positions during the negotiations already sound more realistic. But time is still needed for the decisions to be in the interests of Ukraine," Zelenskiy said in a video address overnight.

Later on Wednesday, he said Ukrainians must fight to "defend our state, our life, our Ukrainian life," but he also emphasised negotiations for "a just but fair peace for Ukraine, real security guarantees that will work."

SOURCE: REUTERS