KIEV, Oct. 16 - Russian President Vladimir Putin and Ukrainian leader Petro Poroshenko will look for ways to settle a dispute over natural gas supplies and end months of conflict in east Ukraine at talks in Italy on Friday, Reuters reported.

The meeting in Milan is an encouraging sign for Moscow, Kiev and Brussels, which fears Russia's decision to cut supplies to Ukraine because of unpaid bills could threaten disruptions in the gas flow to the rest of Europe this winter.

European leaders hope the presidents' third meeting since Poroshenko was elected in May can help the sides build on a much-violated ceasefire agreed by government forces and pro-Russian separatists in eastern Ukraine on Sept. 5.

"I think there are some positive signs. It seems like we are entering a more promising and positive chapter of the whole puzzle about the crisis in and around Ukraine," said Vygaudas Usackas, the European Union's ambassador to Russia.

But he told Reuters the 28-nation bloc wanted "sustainable efforts, and concrete outcomes and tangible results."

Although Putin announced this week that Russian troops near the border with Ukraine would be pulled back, Western officials want to see clear evidence that Moscow is withdrawing troops and military equipment from east Ukraine.

Moscow denies arming the rebels or sending troops, despite what the West says is overwhelming evidence to the contrary.

The Kremlin said Putin and Poroshenko had discussed peace moves in a phone call on Tuesday.

Italian Prime Minister Matteo Renzi will host the meeting between Putin and Poroshenko during a summit of European and Asian leaders, Renzi's office said.

The meeting will also be attended by German Chancellor Angela Merkel, French President Francois Hollande, British Prime Minister David Cameron as well as Herman Van Rompuy, the chairman of European Union leaders, and EU Commission President Jose Manuel Barroso.

Ukraine faces possible energy shortages this winter if no deal is reached, which in turn risks causing disruptions to Europe's gas supplies as happened in 2006 and 2009. Europe receives a third of its gas needs from Russia, around half of which is pumped via Ukraine.

Russian natural gas producer Gazprom cut supplies to Ukraine in June after a disagreement on gas prices. Kiev failed to pay gas debts which Russia says have now reached more than $5 billion.

Officials from Russia and the European Commission, which is mediating the talks, say a deal could be near. Poroshenko said on Saturday he hoped for "significant progress" on the issue during the talks in Milan. (rt/ez)