MOSCOW (AFP) - Russian President Vladimir Putin and German Chancellor Angela Merkel agreed in talks in Brazil on Sunday that the situation in Ukraine, where Kiev is continuing an offensive against pro-Russian separatists in the east, is "deteriorating", the Kremlin said.

"Putin and Merkel had a constructive, very thorough dialogue during which they discussed in detail possible options for resolving the situation in Ukraine," Kremlin spokesman Dmitri Peskov told the Russian news agency Ria Novosti. "The two leaders agreed that unfortunately the situation is deteriorating."