Western leaders gathering in Brussels have sought to build on a successful Ukrainian presidential election to push for a settlement between Moscow and Kiev.

At a two-day Brussels summit of the group of seven, which opened on Wednesday, Obama and European leaders warned the Kremlin of tougher economic sanctions unless Russia stopped facilitating violence in eastern Ukraine. "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 leaders said in a statement late on Wednesday.

But the emphasis was on capitalising on the landslide victory of president-elect Petro Poroshenko to try to encourage direct talks with Russia.

"We consider that we have some diplomatic and political possibilities to see if Russia is ready to engage more and stop destabilisation in Ukraine," said Herman Van Rompuy, the president of the European Council, who co-chaired the summit.

Obama met Poroshenko for the first time on Wednesday in Warsaw before travelling to Brussels.

While being highly critical of the Russian president, Vladimir Putin, over Ukraine, Obama has also used his visit this week to Europe to emphasise the potential for rebuilding trust between Russia and the west, depending on Moscow's behaviour on Ukraine in coming weeks.

Chancellor Angela Merkel of Germany also signalled there may be opportunities for a diplomatic opening to chart a way out of the Ukrainian crisis.

Western officials say they have been mildly encouraged by Putin's response to the Ukrainian presidential election and appear inclined to give the Kremlin the benefit of the doubt.

While Ukraine dominated Wednesday evening's Brussels dinner, it is also certain to loom large over events in France on Friday marking the 70th anniversary of the D-day landings. Putin is to attend and may have his first meeting with Obama since the Ukraine conflict turned violent in February.

In Warsaw Obama accused the Kremlin of resorting to the "dark tactics" of the last century in Ukraine, and pledged to resist Russian aggression in eastern Europe.

"The days of empire and spheres of influence are over," he said at the royal palace in Warsaw.

"Bigger nations must not be allowed to bully the small, or impose their will at the barrel of a gun or with masked men taking over buildings.

"Further Russian provocations will only mean more isolation and costs for Russia. After investing so much blood and treasure to bring Europe together, how can we allow the dark tactics of the 20th century to define this new century?"

Obama invoked the anniversaries this week of the D-day landings in France in 1944 and the communist bloc's first partly free elections in Poland in 1989 as key events in the fight to free Europe from tyranny.

He said: "We've been reminded by Russia's aggression in Ukraine, our free nations cannot be complacent in pursuit of the vision we share – a Europe that is whole and free and at peace. We have to work for that."

The US leader sought to allay fears that the west was reluctant to commit to eastern Europe's security. "As allies, we have a solemn duty to defend your territorial integrity. And we will," he told the Poles.

"We stand together, now and forever, for your freedom is ours. Poland will never stand alone. But not just Poland – Estonia will never stand alone. Latvia will never stand alone. Lithuania will never stand alone. Romania will never stand alone."

In Berlin Merkel, who is to meet Putin in France on Friday, demanded that the Russian leader act forcefully to prevent violence in eastern Ukraine, and to close the borders to arms and paramilitaries entering Ukraine from Russia.

"If this does not stop, we won't flinch from imposing more sanctions," she told the German parliament.

Hosting the G7 summit in Brussels, Van Rompuy echoed Merkel and accused Putin of promoting violence in eastern Ukraine. "We call on Russia to contribute actively to de-escalation efforts," he said, "notably through the withdrawal of its troops from the border, using its leverage on the armed separatists in eastern Ukraine to stop their illegal actions and obtain their disarmament, and preventing the crossing of armed militants and weapons into Ukraine.

"By not addressing these issues Russia is contributing to the increase of violence."

Who's fighting over what

Hollande v Obama on BNP Paribas: The French president told journalists that he did not know whether Obama wanted to discuss the reported $10bn fine the French bank faces in the US for alleged sanctions busting "but me, I will speak to him about it".

Obama v Merkel on phone-tapping: A Geman prosecutor is to open an investigation into allegations the US National Security Agency monitored Angela Merkel's mobile phone. Berlin and Washington are unlikely to cancel dinners over the issue.

Merkel v Cameron on Jean-Claude Juncker: Cameron has taken the strongest stance against Juncker for EU Commission president – Merkel has said she supports Juncker. German media have since raised questions over the UK's future in the EU.

Merkel v Hollande on Christine Lagarde: Reuters reported that Merkel asked Hollande to put forward Christine Lagarde, the French head of the IMF, as an alternative to Juncker. Socialist Hollande is said to oppose both Juncker and Lagarde.

Obama v Putin on Ukraine: Until Russia annexed Crimea, the G8 was to meet in Sochi. Then Russia was expelled, the G8 became the G7 and is meeting in Brussels. Putin will meet Cameron, Hollande and Obama in Normandy on Friday.