By Mark John

BRUSSELS (Reuters) - EU leaders meet in an extraordinary session on Monday to try to unite behind a strong response to Russia's actions in Georgia, but Moscow warned it would hit back at any threat to its interests at home or abroad.

The meeting in Brussels follows weeks of discussions between EU member states over how far to go to punish Russia for its military campaign in Georgia and its subsequent recognition of Georgian breakaway regions South Ossetia and Abkhazia as independent states.

"Tomorrow we have an extraordinary meeting of the European Union. This happens extremely rarely, to my knowledge only once before in modern times, in 2003, for the Iraq war," said Swedish Foreign Minister Carl Bildt, addressing an international energy conference in Slovenia on Sunday.

"It shows the magnitude of the event. ... This five-day war (in Georgia) has changed Europe profoundly."

In the wake of the conflict, there is discord over Moscow's ties with the 27-nation bloc and the broader West, with Germany and France insisting there should be no move to isolate Russia, while Britain and many former eastern-bloc countries arguing it must face some consequences.

The conflict is complicated by the EU's dependence on Moscow for much of its oil and gas, and the struggle to develop other sources such as the Nabucco pipeline due to bring Azeri gas to Europe via Georgia and Turkey.

It is also made difficult by the West's desire to retain Russia's cooperation on difficult diplomatic issues like Iran's nuclear program.

"Obviously the expectations differ considerably," German Foreign Minister Frank-Walter Steinmeier conceded after a weekend round of telephone calls between EU capitals.

DEFEND INTERESTS

Russia sent its troops into Georgian territory after Georgia's military tried to retake South Ossetia, like Abkhazia a Moscow-backed region which rejects Tbilisi's rule.

Moscow has withdrawn most of its forces in line with a ceasefire deal but has kept soldiers and equipment in "security zones," which include undisputed Georgian territory around South Ossetia and Abkhazia.

Western governments have demanded Moscow pull its troops back to pre-conflict positions. The Kremlin says the troops are peacekeepers needed to protect the separatist regions from new Georgian aggression.

Russian President Dmitry Medvedev said his country does not want confrontation or isolation but it will defend its interests when they are threatened.

"The absolute priority for us is the defense of the life and dignity of our citizens, no matter where they are located," Medvedev told Russian television on Sunday.

"We will also defend the interests of our entrepreneurs abroad. And everyone should understand that if someone launches an aggressive sortie, then he will receive a response."

Some of the options being considered by the EU include sanctions and isolating Russia diplomatically.

Ex-Soviet Baltic states want a second round of negotiations over a planned EU-Russia partnership pact, scheduled for September 15-16, to be postponed.

British Prime Minister Gordon Brown has said it might be necessary to exclude Russia from Group of Eight meetings and review its ties with NATO.

"The EU should review -- root and branch -- our relationship with Russia," he told the Observer weekly.

SANCTIONS UNLIKELY

But Germany's Steinmeier told ZDF television a freeze in ties with Moscow would make it impossible to enforce a French-brokered peace deal for Georgia which the West says is still being breached by Russian troops on the ground, adding:

"That's why I clearly say 'No' to all those who want to borrow from the recipes of the Cold War.

"Europe would only be hurting itself if we were to get full of emotion and slam all the doors shut to the rooms that we will want to enter afterwards," Steinmeier said.

France, the current holder of the rotating EU Presidency, said on Friday it was the wrong time to unleash punitive action against Russia.

Georgian Prime Minister Lado Gurgenidze called in a Reuters interview for "smart" EU sanctions against officials and firms doing business with South Ossetia and Abkhazia.

While few expect any specific sanctions to emerge from a meeting scheduled to last barely 150 minutes, EU leaders will likely say EU-Russia ties are "under observation" and some countries want to go even further.

(Additional reporting by Erik Kirschbaum in Berlin; Guy Faulconbridge in Moscow; and Zoran Radosavljevic in Bled, Slovenia, editing by Mary Gabriel )