German Chancellor Angela Merkel on Wednesday reiterated that Ukraine crisis could only be solved through diplomatic channels, but more sanctions against Russia were possible if the situation in Ukraine continued to deteriorate.

"We rely on diplomatic efforts," Merkel told a joint press conference with visiting Swedish Prime Minister Stefan Loefven, adding that the latest Minsk ceasefire agreement was a starting point to solve the crisis, "even if the reaction was very slow."

Separatists in eastern Ukraine said on Tuesday that they had begun withdrawing heavy weapons from the front line, while Ukrainian military sources said they would start pulling back heavy arms no earlier than two days after a complete ceasefire.

According to the latest Minsk agreement brokered by Germany and France, a truce should start on Feb. 15.

Merkel said the Minsk agreement offered "a glimmer of hope," and that parties "should do everything to turn this hope into action."

She added that Germany wants security in Europe "with Russia, not against Russia," but "cannot rule out sanctions if things get worse."

Swedish Prime Minister Loefven told reporters that his country supports Germany to take the leadership in solving the crisis with diplomatic solutions.

"We give our full support for a diplomatic solution. We do not believe in a military solution," he said.