Putin takes centre stage at Asia-Europe summit

Against a backdrop of market turmoil partly blamed on uncertainties over Ukraine, German Chancellor Angela Merkel put the ball firmly in Putin's court.

Merkel said it was "first and foremost" Russia's responsibility to make sure a tenuous ceasefire and peace plan agreed last month with pro-Moscow rebels "really will be implemented."

Putin is due to meet Poroshenko early Friday on the sidelines of the ASEM summit in Milan, with Merkel, French President Francois Hollande, British Premier David Cameron and Italian leader Matteo Renzi all sitting in.

"We will be searching for dialogue here," Merkel said as she arrived for the summit, while Hollande echoed her insistence that the peace plan be fully implemented.

The meeting could prove difficult.

As he readied to come to Milan, Putin bluntly accused US President Barack Obama of outright hostility towards Russia.

Warning that he would not be blackmailed by the West over Ukraine, Putin chillingly warned too of "what discord between large nuclear powers can do to strategic stability."

The Russian president will hold separate talks with Merkel, notably on ensuring "uninterrupted gas supplies for Europe," Putin's top foreign policy advisor Yury Ushakov said.

Russia cut off its gas shipments to Ukraine in June, threatening widespread disruption to supplies in Europe as winter approaches.

With security tight around the summit venue in the futuristic Milan conference centre, topless activists from the Femen group poured wine over their bare chests in front of Milan's cathedral to protest against Putin, saying it symbolized the blood being spilled in the Ukraine conflict.

Economy, markets slump

The headline theme of the ASEM summit is promoting economic cooperation between the more than 50 member states who share one of the world's largest trading relationships.

But mounting problems made themselves clear Thursday as markets sold off sharply once again on fears over Europe's stalled recovery and a slowdown in China, which for so long has been the driver of global growth.

Hollande said stagnation in Europe was to blame.  

"There is international uncertainty, the United States is slowing down, Europe has not found a way back to growth," he said.

European Union leaders meanwhile stressed the need for ties with Asia precisely to boost both economies, given the prospect of slower growth.

"My main message... is that today more than ever European and Asian nations need each other to achieve growth and development and to guarantee security and preserve stability," EU president Herman Van Rompuy said.

China, Russia's 'natural ally'

A key EU partner is China but Putin also lays claim to privileged ties, saying earlier this week China was Russia's "natural ally."

"We are natural partners, natural allies, we are neighbours," Putin said while Chinese Premier Li Keqiang praised the "inexhaustible" potential for cooperation between the two sides who earlier this year signed a mammoth $400 billion gas supply deal.

While Ukraine dominates the summit, there are other intractable territorial disputes in Asia also lying in wait.

Beijing has repeatedly clashed with Tokyo over ownership of a series of islands while Japanese Prime Minister Shinzo Abe has tried without success to arrange a summit with Chinese leaders since he came to power in December 2012.

China in turn may run into flak over its claims to almost all of the South China Sea, a vital shipping route which is also believed to hold significant oil reserves.

Thai junta leader Prayut Chan-O-Cha meanwhile sparked protests by human rights activists, angry to see ASEM offering a welcome to the former general who seized power in a May military coup which the EU condemned sharply.

The two-day ASEM summit is the 10th since the forum was established in 1996 with the aim of fostering economic ties.