The self-styled mayor of the flashpoint city of Slavyansk, Vyacheslav Ponomaryov, told reporters: "There has been good progress and a good productive dialogue."
Ponomaryov's comments offered hope that the monitors -- four from Germany, one Dane, one Pole and one Czech -- might soon be released after five days in captivity.
Earlier today, the head of the Organisation for Security and Cooperation in Europe, Lamberto Zannier, held emergency talks in Kiev with the US ambassador to Ukraine and the foreign minister.
The US ambassador, Geoffrey Pyatt, stressed that the men should be released "without conditions".
Rebels holding the group have previously described them as "prisoners of war" and said they will only be freed in exchange for the release of militants in custody. More recently they have taken to calling them "guests".