The leaders of the powerful G7 industrial nations meet in Brussels - with a noticeable exception - Russia President Vladimir Putin.

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Mr Putin was due to host the heads of leading industrialised nations at a summit of the G8 in the Black Sea resort of Sochi this week – but the G7 nations have held the meeting in Brussels instead.

While Ukraine was able to hold a largely peaceful presidential election in May, the situation in the east near the Russian border remains volatile, with armed groups attacking Ukrainian government forces and occupying state buildings.

"We stand ready to intensify targeted sanctions and to consider significant additional restrictive measures to impose further costs on Russia should events so require," the G7 said in a statement after evening talks in Brussels on Wednesday.

Ukraine crisis

German Chancellor Angela Merkel said western powers would check "again and again" to verify that Russia was doing what it could to stabilise the situation, which erupted in March after Russia seized Crimea from Ukraine and annexed it.

"We cannot afford a further destabilisation in Ukraine," Merkel said.

"If we do not have progress in the questions we have to solve there is the possibility of sanctions, even heavy sanctions of phase 3 on the table," she said, referring to restrictions on trade, finance and energy.

Asked how he felt about the summit, Mr Putin told: "I would like to wish them bon appetite."

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Russia joined the G7 in 1997, making it the G8 and marking a milestone in Moscow's rapprochement with the west after the collapse of communism and breakup of the Soviet Union in 1991. But the crisis in Ukraine has driven Russia's relations with the United States and European Union to a post-Cold War low.

Western nations have imposed visa bans and asset freezes on officials, lawmakers and companies close to Putin.

At the G7 summit, President Barack Obama said Mr Putin must recognize and work with Ukraine's new government and stop "provocations" along its border, or face tougher sanctions from members of the G7 group of nations.

"We will have a chance to see what Mr. Putin does over the next two, three, four weeks, and if he remains on the current course then we've already indicated the kinds of actions that we're prepared to take," Mr Obama told at a news conference at the end of a G7 summit.

The president added that he would have preferred it if France had held back on the sale of Mistral helicopter carriers to Russia.

Clear messages

David Cameron laid out a series of steps Mr Putin has to take if he is to avoid deepening international isolation.

At a joint news conference with US president Barack Obama, Mr Cameron said Moscow needed to recognise the election of new Ukrainian president Petro Poroshenko, stop the flow of arms across the border and cease support for pro-Russian separatist groups.

"Russia's actions are completely unacceptable and totally at odds with the values of this group of democracies," he said.

"The status quo is unacceptable. The continuing destabilisation of eastern Ukraine must stop.

"If these things don't happen, then sectoral sanctions will follow. The next month will be vital in judging if President Putin has taken these steps"

Speaking later, after a face-to-face meeting with the Russian leader in Paris, Mr Cameron said he gave Russian president Vladimir Putin a "very clear and firm set of messages" during face-to-face talks in Paris about the Ukraine crisis and said the current situation is "not acceptable".

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