The European Union will not impose sanctions against Russia at Monday's emergency summit on the Georgia crisis, backing away from an economic confrontation with its largest energy supplier, officials said on Friday.

Moscow has for days taunted the 27-nation EU over its failure to match tough verbal condemnations of Russia's intervention in breakaway South Ossetia with action, arguing that any breakdown in relations would hurt Europe more.

EU leaders are instead due to state that ties with Russia are "under observation" and emphasise their readiness to help Georgia with reconstruction, to offer Tbilisi a free-trade deal and ease visa restrictions on its citizens.

"At the current stage, we do not expect any sanctions to be decided by the European Council," a senior French diplomat, whose country holds the rotating EU presidency, told reporters ahead of the half-day summit in Brussels.

It remained unclear, however, whether a second round of negotiations on a wide-ranging new partnership between the EU and Russia would go ahead as planned on Sept. 15-16, with some countries saying it made sense to postpone the talks.

Yet with a solid core of states including France, Germany and Italy resisting sanctions, even previous backers of a tougher line such as the ex-Soviet Baltic states, Poland and Britain were softening their tone for the sake of EU unity.

"We should not be looking for ways to punish Russia," Lithuanian Foreign Minister Petras Vaitiekunas told reporters in Vilnius. "The most important thing is to have a unified EU position, as the conflict is obviously not going to end soon," said Vaitiekunas, who only last week insisted Russia should face consequences for its actions.

Suspending talks

The EU depends on Russia for about a third of its oil and gas, with individual countries even more tied to its supplies.

European diplomats said they had received signals from the Kremlin that Russia would retaliate if the EU imposed punitive measures, but Moscow denied a British report that it was prepared to restrict oil supplies in the event of sanctions.

Western states have accused Russia of using excessive force with a massive counterattack that stubbed out Georgia's attempt to take back breakaway South Ossetia three weeks ago.

Brushing off Western condemnations of its move this week to recognise the rebel South Ossetia and Abkhazia regions, Russian Foreign Minister Sergei Lavrov on Thursday said talk of EU sanctions on Russia was the product of a "sick imagination".

Possible sanctions had included the EU scaling back existing low-level negotiations with Moscow on areas of cooperation, withdrawing support for Russia's bid to join the World Trade Organisation, and tightening visa rules for Russian travellers.

But diplomats said those ideas had fallen by the wayside and instead leaders would seek to draft a strong warning that future EU-Russia relations depended on Moscow's actions.

Latvia's Foreign Minister Maris Riekstinsh told Reuters his country favoured suspending talks on the EU-Russia partnership, which is due to encompass trade, energy and political ties.

In Warsaw, Polish Prime Minister Donald Tusk told a news conference there should be a review of whether an EU-Russia summit with President Dmitry Medvedev set for November in the French Riviera city of Nice should go ahead.

A statement from Monday's emergency summit is also expected to reaffirm that Russia should fully implement a French-brokered peace plan and respect Georgia's territorial integrity.

EU planners have been charged to draw up a mandate for a "numerically limited" civilian monitoring mission, a French presidency official said, stressing that there were no plans to send armed EU peacekeepers for now.