The meeting came as fighting continued in eastern Ukraine
Russian President Vladimir Putin and Ukrainian President-elect Petro Poroshenko have called for a quick end to the bloodshed in eastern Ukraine, Russian officials have said.
The two leaders were meeting for the first time since Mr Poroshenko's election, at a D-Day event in France.
Immediate ceasefire was vital to create conditions for talks, Mr Putin said.
Separately US President Barack Obama spoke to Mr Putin of the need to de-escalate the situation.
Fighting continues, with government forces reportedly launching a tank attack near rebel-held Sloviansk.
The Ukrainian authorities have announced an "active phase" of what they call an anti-terrorist operation in and around Sloviansk, which was seized by pro-Russian militants several weeks ago.
The BBC's Steve Rosenberg, who was near the town on Thursday, says it was clear Ukrainian forces had encircled it and moved in a lot of weaponry.
Separately, Ukrainian media reported that one member of the security forces had been killed and several wounded in a mortar attack outside the city.
'Informal meeting'
The three leaders are said to have chatted for about 15 minutes, in between a photo for world leaders and a meal organised by French President Francois Hollande.
"During the brief conversation, both Putin and Poroshenko called for a quick end to the bloodshed in south-eastern Ukraine, and also to military activity by both sides", said Kremlin aide Dmitry Peskov.
"It was also confirmed that there is no alternative to settling the situation by peaceful political means."
Analysis
By James Robbins, BBC diplomatic correspondent
Seventy years on, the landing grounds of Normandy may still have the capacity to change history. Today, France and Germany took the lead bringing together Vladimir Putin and Ukraine's President-elect Petro Poroshenko for the first time.
Chancellor Merkel shepherded the two leaders. They shook hands and talked for about a quarter of an hour just before the lunch for world leaders. French officials said a potential ceasefire between Ukrainian government forces and pro-Russian separatists was discussed.
Agreeing the terms could still be very hard, but the fact that President Putin has all but accepted the legitimacy of Ukraine's new president by meeting him is seen by other leaders as highly significant.
The G7 threat of far harsher economic sanctions against Russia if it doesn't go further still stands. But D-Day 2014 has certainly launched a dialogue about ending present day efforts to redraw the map of Europe.
"The conversation took place on possible measures to de-escalate [the crisis], including how Moscow could recognise the election of Poroshenko," a French official said.
"The details of a ceasefire will also be discussed in coming days."
Mr Putin said later he welcomed Mr Poroshenko's proposals to stop the bloodshed, adding that Ukraine had to stop its "punitive" military operation in the south-east.
Mr Hollande said the meeting had created conditions for de-escalation, and if this was later achieved 6 June 2014 would be remembered as an important date.
Mr Putin and Mr Obama had had an "informal meeting" lasting about 10-15 minutes, according to the White House.
Mr Obama said de-escalation in Ukraine depended on Moscow recognising Mr Poroshenko as Ukrainian leader, ending support for separatists and stopping the supply of arms and materiel across the border, a US official said.
Mrs Merkel said Russia bore "great responsibility" for making peace in Ukraine.
The leaders posed for a photo before a meal organised by Mr Hollande
Mr Obama and Mr Putin also had brief talks at the meal
Meanwhile fighting continues near the eastern Ukrainian town of Sloviansk
Failure to do so could lead to deeper international isolation for Russia, Mr Obama was quoted as saying.
However, Germany is cautious about expanding sanctions against Russia.
Mrs Merkel told a summit of the G7 states in Brussels this week that further sanctions would take effect only if there had been "no progress whatsoever".
Targeted sanctions were introduced by the EU and US after Russia annexed the Ukrainian territory of Crimea in March, following a controversial referendum on joining Russia.
Since then, a bloody insurgency has gripped Ukraine's eastern provinces of Donetsk and Luhansk, on the Russian border.
Pro-Russian separatists there have declared independence from Ukraine, refusing to recognise the pro-EU government which replaced President Viktor Yanukovych after he was ousted in February.
Mr Putin denies military involvement despite the fact that Russians are fighting with the rebels.
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