"However complicated the questions are, maximum efforts must be applied to resolve the situation in a peaceful way and I think all efforts have not been exhausted," Putin said.
"However, it is our impression that aside from seeking to return the abducted soldiers, Israel is pursuing wider goals," Putin said at a midnight news conference after a dinner opening the summit of the Group of Eight industrialized nations. He did not elaborate.
Israel began military strikes against Israel on Wednesday, when Hezbollah captured two Israeli soldiers in a cross-border raid. As civilian deaths mount, diplomatic efforts to end the crisis have yet to get off the ground.
The violence in the Middle East is certain to dominate the G-8 summit, and differences between the leaders began to appear even before the summit began.
U.S. President George W. Bush, who met on Saturday with Putin ahead of the summit, has been outspoken in defending Israel and accusing Hezbollah — backed by Syria and Iran — of igniting the crisis with its cross-border raid.
"In my judgment, the best way to stop the violence is to understand why the violence occurred in the first place," Mr. Bush said. "And that's because Hezbollah has been launching rocket attacks out of Lebanon into Israel and because Hezbollah captured two Israeli soldiers."
Putin agreed it was unacceptable to pursue goals using force, but said that "at the same time, we work under the assumption that the use of force should be balanced."
"The best way to stop the violence is for Hezbollah to lay down its arms and to stop attacking," Mr. Bush said. "And therefore, I call on Syria to exert influence over Hezbollah."
The G-8 countries — the United States, Russia, Japan, Germany, Britain, France, Italy and Canada — were expected to issue a declaration on the Lebanon crisis.
The leaders of France and Italy share Putin's line of thinking, reports CBS News chief White House correspondent Jim Axelrod. Italy's Prime Minister Romano Prodi says Israel has responded disproportionately. France's Jacques Chirac wondered if Israel didn't have "a will to destroy Lebanon."
The challenge for the G-8 leaders to speak with one voice about the crisis in the Middle East is clear, reports Axelrod.
There will be other issues discussed at the meeting in St. Petersburg – including the simmering tension between the United States and Russia.
President Bushon Saturday and challenged Russia's crackdown on dissent and its retreat from democracy.
"I talked about my desire to promote institutional change in parts of the world like Iraq where there's a free press and free religion," Mr. Bush said at the news conference, "and I told him that a lot of people in our country would hope that Russia would do the same thing."
Putin, in a barbed reply, said: "We certainly would not want to have the same kind of democracy as they have in Iraq, I will tell you quite honestly." Mr. Bush's face reddened as he tried to laugh off the remark. "Just wait," Mr. Bush replied about Iraq.
Putin said the G-8 summit would also address conflicts in former Soviet states, and said he had discussed the issue with Mr. Bush during their meeting earlier in the day.
He said he and Mr. Bush had focused mostly on Georgia, where tensions are rising over the separatist provinces of Abkhazia and most recently South Ossetia.
Georgian President Mikhail Saakashvili, who visited Bush at the White House last week, has made it a priority to bring the two rebel regions back into the government fold. Russia, which has peacekeepers in the region, has provided support to the separatists — in part by issuing passports to their citizens.