President Putin’s call on pro-Russian separatists in eastern Ukraine to postpone a referendum on independence scheduled for this Sunday has once again raised hopes that a diplomatic resolution to the crisis in Ukraine might be found, and has triggered a rally in Russia’s bond and equity markets. However, while signs of a more conciliatory approach by Russia are clearly a step in the right direction, the situation on the ground remains fractious and there are several potential flashpoints that could cause the crisis to escalate further over the coming weeks.
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