* Putin under pressure to tell rebels to end fighting
* Russian leader shows few signs of changing stance
* Western leaders threaten more sanctions
By Timothy Heritage
MOSCOW, July 20 (Reuters) - Russian President Vladimir Putin is in the "last chance saloon" over the Ukraine crisis but appears to be doing little to get out of it.
Since Malaysia Airlines flight MH17 was brought down over east Ukraine, Putin has been under intense international pressure to persuade pro-Russian separatists accused by the West of shooting it down to stop fighting.
But for now he seems more intent on bluffing his way through than on trying to use this pivotal moment to emerge as a peacemaker by ending a conflict that has caused the worst tensions with the West since the Cold War.
"The only sensible step now would be to stop the fighting in Ukraine immediately and begin a political process," said Dmitry Trenin, head of the Carnegie Moscow Centre think tank.
"The tragic and sudden loss of so many innocent lives should put a final point to the armed conflict. Or it may put the international conflict over Ukraine on a much higher and more dangerous level. The choice is still to be made, but the time is running out fast."
There is no evidence that Putin has made that choice, and he continues to keep the world guessing about his next moves.
There is also no sign of a major change of tack by the Russian leader since the airliner was brought down on Thursday, killing 298 people.
REBELS FIGHT ON
Putin, who denies supplying arms to the rebels who have risen up against Kiev's rule of Russian-speaking east Ukraine, has made muted calls for a ceasefire and demanded an independent investigation in telephone conversations with Western leaders.
Foreign Minister Sergei Lavrov went so far as to say Moscow and Washington should use their influence with the rival sides to end the fighting in eastern Ukraine.
But there is no sign of any change in the rebels' behaviour and the president has made no public appeal to them or called for new moves to tighten controls at Russia's border, where Washington says arms are getting into Ukraine.
Most Russian media are painting a very different picture of events to Western leaders and Putin's allies have rallied around him, blaming the incident on Ukraine's pro-Western leaders and accusing Washington of orchestrating events in Kiev.
The former KGB spy is being pushed into a corner by statements by Western leaders that this is his last chance to do something to end the crisis in Ukraine or face more sanctions.
But some Russian experts warn that this is a risky move that could backfire on the West. If you drive a man like Putin into a corner, they say, he will more often than not come out fighting.
"This is a dangerous game," said Gleb Pavlovsky, a former Kremlin spin doctor, suggesting Putin would find it hard to justify backtracking on Ukraine to a domestic audience fed for months on media propaganda reminiscent of the Soviet era.
"How the Kremlin can get out of this is not clear after what has been done, and after what has been said on Russian television," he said in a radio interview.
Putin often lays low after big events that could require a review of long-term strategy.
Since the overthrow of a Ukrainian president sympathetic to Moscow in February, he has sought ways to maintain influence in a country seen by Russians as the cradle of their civilisation.
After annexing the Crimea region in March, he has veered away from an armed invasion to back the rebels in eastern Ukraine and appeared content to let the chaos undermine the pro-Western leadership in Kiev.
Preventing Ukraine joining NATO and keeping some influence in the east have appeared key goals, preferably with more autonomy granted to the rebellious regions in the east.
But if the rebels are confirmed irrefutably to have shot down the airliner with a missile that came from Russia, Putin could go from being seen as just an outsider in global diplomacy to being treated as an international pariah.
Recalling the bombing of an airliner over Scotland in 1988 that was blamed on Libya under Muammar Gaddafi, political analyst Yulia Latynina said: "In one fell swoop we have been caught up with Gaddafi and (Osama) bin Laden."
Putin has shown several signs in the past few weeks that he wants to de-escalate the conflict because it risks getting out of control and further sanctions could cause serious damage to an economy already sliding towards recession.
But Western capitals accuse him of not backing up his promises to reduce tensions with actions, and he might yet risk the wrath of the West and further isolation.
Either choice of action entails risk and he is already under fire from some critics, some of whom may see a glimmer of an opportunity for the opposition, until now largely silenced and sidelined by the surge in popularity for Putin over Crimea.
"Putin should immediately have addressed the nation," Alexander Minkin, a political scientist, wrote in a blog.
"He didn't need to inform Obama but should have told the citizens of Russia what happened and that he had given an order to immediately start an investigation into whose weapon was used and how it got there."
Putin has been accused of a lack of transparency, indecisiveness and not caring before - when a Russian submarine sank and all 118 people aboard were killed in August 2000, shortly after he became president.
He came through that crisis but only after being criticised in Russia as well as abroad. For some Russians, his behaviour was all too reminiscent of Soviet leaders' initial secrecy over the 1986 Chernobyl nuclear accident.
Putin will also want to shake off any comparisons with the shooting down of a Korean airliner over the Soviet Union in 1983 which deepened the Cold War chill with the United States.
Until now he has repeatedly exploited divisions in the Western camp during global crises, including Syria, and may be trying to gauge the resolve of Obama's European allies to tighten sanctions against Russia.
Initially after the attack, German Chancellor Angela Merkel, leader of the biggest European Union state and long its economic powerhouse, suggested she still harboured doubts about imposing major new sanctions on Russia.
Germany is an importer of Russian gas and Germany's business lobby has been especially vocal in its criticism of sanctions. But since Merkel's initial comments, German leaders have also said this is Putin's last chance to act on Ukraine.
If the West acts as one, it will be much harder for Putin to emerge on top from the crisis. (Reporting by Timothy Heritage; Editing by Giles Elgood)