EU leaders hopeful of Ukraine progress after Putin talks
Russia's President Vladimir Putin (C) shakes hands with Ukraine's President Petro Poroshenko before their meeting with European leaders on Ukraine's crisis, on October 17, 2014 (AFP)

European Union leaders expressed optimism on the chances of progress towards a resolution of the deadly crisis in Ukraine after talks in Milan with Vladimir Putin on Friday.

"In general I am really positive after this meeting," Italian Prime Minister Matteo Renzi told reporters after hosting a breakfast meeting of the Russian President, his Ukrainian counterpart Petro Poroshenko and the leaders of Britain, France and Germany.

"It was a very positive meeting," added British Prime Minister David Cameron.

"Vladimir Putin said very clearly that he doesn't want a frozen conflict and he doesn't want a divided Ukraine," Cameron said, warning that it was now up to Putin to demonstrate in practice that he meant what he said.

Further talks involving only Putin, Poroshenko, French President Francois Hollande and German Chancellor Angela Merkel were scheduled for later on Friday, French officials told AFP.

Fresh from warning he could pull the plug on crucial Russian gas supplies to western Europe this winter, Putin looked relaxed and smiled broadly as he arrived for Friday's talks.

They took place against a backdrop of sharp differences between the West and Moscow over the implementation of a ceasefire and peace accord agreed last month between the pro-Western government in Ukraine and and pro-Russian rebels in the east of the country.

Talks between Putin and Merkel that continued into the early hours of Friday morning were said by the Kremlin to have exposed "serious differences" over the roots of the conflict.

Fighting in Ukraine has left more than 3,600 people dead since it erupted in March following Russia's annexation of Crimea.

A ceasefire negotiated on September 5 in Minsk, has repeatedly been violated by both sides while international sanctions on Russia and Moscow's counter measures have globalised the fallout from the crisis.

Russia has threatened to cut gas deliveries to Ukraine if there is no agreement with Kiev over billions of dollars worth of unpaid bills -- a stance that European governments fear will lead to a repeat of 2006 and 2009 disruptions of supplies to western Europe.

Tensions over flight MH17

The diplomatic shuttling over Ukraine took place on the sidelines of an Asia-Europe (ASEM) summit that has been completely overshadowed by the crisis, which has deepened in recent days.

NATO says it has seen no sign of a promised Russian pullback of troops stationed on or near the Ukrainian border, while Putin has warned he will not be "blackmailed" by the West.

The fallout from the July shooting-down of Malaysia Airliines flight MH17 over eastern Ukraine has also exacerbated tensions between Western governments and Putin.

Dutch Prime Minister Mark Rutte met the Russian president to demand "maximum cooperation" with an investigation into the incident, which has been hampered because of problems forensic experts have had in accessing the crash site.

"It is an emotional subject and of course I am angry at all parties who have made it impossible to start work in at the crash site," Rutte said.

Australian Foreign Minister Julie Bishop also raised the issue with Russian counterpart Sergei Lavrov.

The ASEM summit brings together more than 50 member states who share one of the world's largest trading relationships at a time of growing uncertainty over the economic outlook.

Ukraine apart, the most notable feature of the opening day of the summit was the participation of Thai junta leader Prayut Chan-O-Cha, who was attending his first global gathering since grabbing power in a May military coup which the EU condemned sharply.

In a sign that the international community appears to have accepted that Prayut will be around for some time to come, he was granted a bilateral meeting with Japanese Prime Minister Shinzo Abe.

Officials said the Japanese premier had told the former general that massive Japanese investment in Thailand could be at risk, over time, if he did not restore democracy and eliminate the risk factor caused by political instability.

They also confirmed that there had been no contact between Abe and his Chinese counterpart Li Keqiang as tensions in East Asia flared once more following a visit by Japanese lawmakers to a controversial war shrine in Tokyo.