By Steve Holland, Guy Faulconbridge and Max Hunder

WASHINGTON/MOSCOW/KYIV (Reuters) -U.S. President Donald Trump again expressed frustration on Wednesday with Russian President Vladimir Putin over the intensifying Ukraine conflict, a day after warning that Putin was "playing with fire" by resisting ceasefire talks while escalating drone and missile attacks.

But Trump also told reporters in the Oval Office that he was not yet prepared to impose new sanctions on Russia because he did not want the penalties to scuttle a potential peace deal.

Russia has proposed holding the next round of direct talks with Ukraine on June 2 in Istanbul, Russian Foreign Minister Sergei Lavrov said on Wednesday. There was no immediate response from Kyiv.

The public squabble between the U.S. and Russia unfolded as the three-year-old war heats up, with swarms of drones launched by both Russia and Ukraine and Russian troops advancing at key points along the front.

Delegates from Russia and Ukraine met earlier this month in Istanbul under pressure from Trump to end the bloodiest conflict in Europe since World War Two, but the talks failed to yield the ceasefire that Kyiv and its Western allies have pushed for. Moscow said certain conditions needed to be met before a ceasefire agreement.

Asked whether the Russian leader might be intentionally delaying negotiations, Trump said, "We're going to find out whether or not he's tapping us along or not, and if he is, we'll respond a little differently."

After speaking to Trump on May 19, Putin said he had agreed to work with Ukraine on a memorandum which would set out the contours of a peace accord including the timing of a ceasefire.

Putin's demands for ending the war include a written pledge from Western leaders that NATO will not expand eastward to former Soviet republics such as Ukraine and Georgia and the lifting of some sanctions on Russia, according to Russian sources with knowledge of the negotiations.

In a post on Truth Social on Tuesday, Trump had warned Putin that he was "playing with fire" and that "really bad" things would have happened to Russia already if not for Trump himself.

Putin's foreign policy aide, Yuri Ushakov, told a state TV reporter that Trump's remark suggested he is not well-briefed on the realities of the war.

WAR HEATING UP

Russia said on Wednesday it had downed 296 Ukrainian drones over 13 regions overnight, while Ukraine's military said it had struck several Russian weapon production sites.

Ukraine said Russia had launched 88 drones and five ballistic missiles.

After Russia said in late April it had ejected Ukrainian forces from the western Kursk region, Moscow's forces have pushed over the border into the neighbouring Sumy region of northeastern Ukraine and taken several villages there.

Ukrainian President Volodymyr Zelenskiy said that Russia has gathered 50,000 troops near the northern Sumy region, but added that Kyiv had taken steps to prevent Moscow from conducting a large-scale offensive there.

Speaking in Berlin during a visit by Zelenskiy, German Chancellor Friedrich Merz said that Germany and Ukraine will develop the joint production of long-range missiles, a move the Kremlin said was irresponsible and amounted to stoking the war.

Russian Defence Minister Andrei Belousov said that the U.S.-led NATO military alliance was using the Ukrainian crisis to build up its presence across eastern Europe and the Baltic but that Russia was advancing along the entire front in Ukraine.

Putin ordered tens of thousands of troops to invade Ukraine in February 2022 after eight years of fighting in eastern Ukraine between Russian-backed separatists and Ukrainian troops.

Russia currently controls just under one fifth of Ukraine. Though Russian advances have accelerated over the past year, the war is costing both Russia and Ukraine dearly in terms of casualties and military spending.

(Reporting by Reuters in Moscow, Kyiv, Berlin and Washington; Editing by Ros Russell, Don Durfee and Cynthia Osterman)