Russia's financial markets soared and the price of Ukraine's debt rose at the prospect of the first peace talks since the early months of Europe's deadliest war since World War Two, soon to enter its fourth year.

But Trump's unilateral overture to Putin, accompanied by apparent concessions on Ukraine's principal demands, raised alarm for both Kyiv and the European allies in NATO who said they feared the White House might make a deal without them.

"We, as a sovereign country, simply will not be able to accept any agreements without us," Ukrainian President Volodymyr Zelenskiy said.

He said Putin aimed to make his negotiations bilateral with the United States, and it was important not to allow that.

European officials took an exceptionally firm line in public towards Trump's peace overture, saying any agreement would be impossible to implement unless they and the Ukrainians were included in negotiating it.

"Any quick fix is a dirty deal," European foreign policy chief Kaja Kallas said. She also strongly denounced the apparent concessions offered in advance.

"Why are we giving them (Russia) everything that they want even before the negotiations have been started?" said Kallas. "It's appeasement. It has never worked."

A European diplomatic source said ministers had agreed to engage in a "frank and demanding dialogue" with U.S. officials - some of the strongest language in the diplomatic lexicon - at the annual Munich Security Conference beginning on Friday.

Trump, who made the first publicly acknowledged White House call with Putin since the February 2022 full-scale invasion, and then followed it up with a call to Zelenskiy, said he believed both men wanted peace.

But the Trump administration also said openly for the first time that it was unrealistic for Ukraine to expect to return to its 2014 borders or join the NATO alliance as part of any agreement, and that no U.S. troops would join any security force in Ukraine that might be set up to guarantee a ceasefire.

U.S. Defense Secretary Pete Hegseth said on Thursday the world was fortunate to have Trump, the "best negotiator on the planet, bringing two sides together to find a negotiated peace".

'POLITICAL WILL'

The Kremlin, for its part, said it was "impressed" by Trump's position, which it contrasted with that of his predecessor Joe Biden.

"There is a political will, which was emphasised during yesterday's conversation, to conduct a dialogue in search of a settlement," Kremlin spokesman Dmitry Peskov said.

Russia seized Ukraine's Crimea peninsula and its proxies captured territory in the east in 2014, before its full-scale invasion in 2022 when it captured more land in the east and south.

Ukraine pushed Russian troops back from the outskirts of Kyiv and recaptured swathes of territory in 2022, but its outmanned and outgunned forces have slowly ceded more land since a failed Ukrainian counter-offensive in 2023.

Relentless fighting has killed or injured hundreds of thousands of troops on both sides - there is no reliable death toll - and pulverised Ukrainian cities.

Through years of fighting there has been no narrowing of positions on either side. Moscow demands Kyiv cede more land and be rendered permanently neutral in any peace deal; Kyiv says Russian troops must withdraw and it must win security guarantees equivalent to NATO membership to prevent future attacks.

Ukrainian officials have acknowledged in the past that full NATO membership may be out of reach in the short term and that a hypothetical peace deal could leave some occupied land in Russian hands.

But Kyiv and its European allies made clear they were alarmed by Trump having opened negotiations with apparent concessions to Moscow, without first agreeing a common position.

Ukraine's Foreign Minister Andrii Sybiha said Kyiv remained committed to applying to join NATO, which he said was the simplest and least expensive way the West could provide the security guarantees needed to ensure peace.

"All our allies have said the path of Ukraine towards NATO is irreversible. This prospect is in our constitution. It is in our strategic interest."

'SURRENDER'

The mood in Ukraine's capital on Thursday was downbeat.

Kyiv resident Myroslava Lesko, 23, standing near a sea of flags downtown honouring fallen troops, said: "It truly looks as if they want to surrender Ukraine, because I don't see any benefits for our country from these negotiations or Trump's rhetoric."

However, Ukrainians have been worn out by three years of war, and many say they are prepared to sacrifice some aims to achieve peace.

Many were frustrated by U.S. policy under former President Biden, who had vowed to help Ukraine win all its land back and provided tens of billions of dollars worth of military hardware, but with restrictions and delays that Ukrainian commanders say allowed Russian forces to regroup.

Trump, at least, is being more forthright about the limits of U.S. support, said Tymofiy Mylovanov, president of the Kyiv School of Economics.

"The difference between Biden and Trump is that Trump says out loud what Biden was thinking and doing about Ukraine," he said.