* Chancellor issues 'clear call' for Russia to contribute to peace process
* Says indications that separatists getting weapons from Russia
* Says no alternative to dialogue with Putin over Ukraine crisis
* Too soon to decide on tougher sanctions (Adds comment on separatists' weapons, context on trade links)
By Stephen Brown and Annika Breidthardt
BERLIN, July 18 (Reuters) - Moscow must take responsibility for advancing a peace process in Ukraine, where a truce is needed to allow an investigation into the crash of an airliner close to the Russian border, German Chancellor Angela Merkel said on Friday.
For the West, there was no alternative to seeking dialogue with Putin over Ukraine, Merkel told a news conference in Berlin, adding that it was too soon to make any decisions about imposing tougher sanctions against Russia.
There are many indications that the Malaysian Airlines Boeing 777 plane was shot down, and the perpetrators must be bought to justice and an independent investigation started as quickly as possible, she said.
"These events have once again shown us that what is required is a political solution and above all that it is also Russia that is responsible for what is happening in Ukraine at the moment," Merkel said.
All 298 people on board the downed airliner were killed, in an incident that could mark a pivotal moment in the worst crisis between Russia and the West since the Cold War.
The crash came a day after European Union leaders stepped up sanctions on Moscow, agreeing to penalise Russian companies that help destabilise Ukraine and to block new loans to Russia through two multilateral lenders.
Merkel issued "a very clear call for the Russian president (Vladimir Putin) and government to make their contribution to bringing about a political solution".
BORDER MUST BE SECURED
One U.S. official said Washington strongly suspected the plane was downed by a sophisticated surface-to-air missile fired by Ukrainian separatists backed by Moscow.
"It is indeed the case that the separatists are heavily- armed and there are many indications that some of these weapons have come across the border from Russia," Merkel said.
"Therefore the border regime is of utmost importance to us."
Merkel and Putin have been in regular telephone contact over the Ukraine crisis, with the German leader urging her Russian counterpart to use his influence with the separatists to help bring about an end to the fighting in the east in which hundreds of people have been killed.
Putin pinned the blame for the crash on Kiev for renewing its offensive against rebels two weeks ago after a ceasefire failed to hold. The Kremlin leader called for a "thorough and unbiased" investigation.
Germany has strong trade links with Russia, and industry associations in Berlin expressed concern on Thursday that business with Russia will suffer further after the EU stepped up sanctions.
But the shooting down of the passenger plane could ratchet up pressure for further action.
"We have previously assumed that Stage 3 sanctions, especially from the EU, are unlikely and nothing we have heard from the U.S. or EU earlier this week changes that. But the Malaysian airliner tragedy is a potential game changer," said Chris Weafer, a partner of Macro-Advisory, a consulting firm in Moscow.
"Either the event will push Russia towards greater isolationism as a response to the broadly based global criticism, inevitable if the accusations are proven, or it will mark some sort of end, or the start of the end, of the most dangerous phase in the conflict in eastern Ukraine." (Reporting by Stephen Brown and Annika Breidthardt, writing by John Stonestreet,; editing by Mike Peacock)
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