ST. PETERSBURG, RUSSIA ? Leaders of the world’s industrial powers clashed Saturday over the escalating violence in the Middle East even as the summit host, Russian President Vladimir Putin, pledged, “We will find common ground on this.”

The leaders opened the summit – the first in Russia – with a dinner at the opulent 18th century Peterhof Palace, which was extensively damaged during World War II and then painstakingly rebuilt. Formal talks were to begin today at a second palace that doubles as Putin’s residence while he is in St. Petersburg.

Putin had wanted this year’s Group of Eight summit to focus on bolstering energy supplies, boosting education and fighting infectious diseases. But the military conflict between Israel and Lebanon is dominating the discussions. Iran’s and North Korea’s nuclear ambitions also are likely to overtake the agenda.

“We’ve got a lot to work on,” President Bush acknowledged.

Putin demonstrated he was prepared to put in long hours, holding a midnight news conference after attending the summit’s opening dinner. And to applause from journalists, Putin said he would make himself available again tonight to keep the world informed of the deliberations.

Putin said “maximum efforts must be applied to resolve the situation in a peaceful way” in Lebanon. He also said he thought Israel was after more than just the return of its two soldiers, but he did not elaborate.

U.S. President George Bush extends his hands to Russian President Vladimir Putin at the start of their bilateral meeting Saturday at the Group of Eight summit in St. Petersburg, Russia.

The G-8 countries – the United States, Russia, Japan, Germany, Britain, France, Italy and Canada – were expected to issue a joint declaration on the Middle East.

However, the document’s drafters were struggling to deal with sharp differences between the United States and the other countries over how to proceed. The United States is pressing for a statement that identifies Hezbollah militants as the main culprit and emphasizes the importance of maintaining a democratic Lebanon.

But Italian Premier Romano Prodi expressed caution on a joint statement. “We are still in the phase where we are exposing our positions, not in a negotiating phase,” he said.

Bush said Israel has a right to defend itself. “The best way to stop the violence is for Hezbollah to lay down its arms and to stop attacking,” he said.

Earlier Saturday, Putin and other leaders criticized what they see as an overreaction by Israel that has caused dozens of civilian deaths and risked a major escalation of bloodshed in the Middle East.

“We understand the right of Israel to defend itself, of course, and we understand there were provocations against Israel, but we believe the use of force by Israel was disproportionate,” Prodi told reporters.

French President Jacques Chirac was even harsher in his comments, saying, “One could ask if today there is not sort of a will to destroy Lebanon, its equipment, its roads, its communications.”

Japanese Prime Minister Junichiro Koizumi said he understood Israel’s anger but urged against seeking “an eye for an eye.”

Putin said it was unacceptable for Hezbollah to try to achieve its goals using force and abductions, but he also was critical of Israel’s military response.

“The use of force should be balanced. And, in any case, bloodshed should stop as soon as possible,” he said.