* Ukrainian leader warns of all-out war with Russia
* France warns no time to waste to halt slide into war (New throughout, adds meeting continues, background)
By Adrian Croft and Jan Strupczewski
BRUSSELS, Aug 30 (Reuters) - European Union leaders on Saturday chose Poland Prime Minister Donald Tusk to chair their Council and named Italian Federica Mogherini to run the bloc's foreign relations, as the EU prepared to threaten Russia with new sanctions over Ukraine.
A summit in Brussels shared the two coveted EU posts between a Kremlin critic from ex-communist Eastern Europe and the foreign minister of one of Moscow's biggest customers for gas. EU officials gave Ukraine's embattled President Petro Poroshenko a warm welcome and assurances of further support.
But divisions among the 28 EU nations have hampered action against Moscow, and a draft of the final statement indicated that they will merely ask the bloc's executive arm "urgently" to prepare more options for sanctions. Discussion on the measures lasted beyond midnight (2200 GMT).
Poroshenko, who warned that a failure of attempts in coming days to end fighting with Russian troops and rebels in the east could lead to "full-scale war", said EU leaders had agreed that new sanctions would be conditional on his peace plan working.
The appointment of Tusk as president of the European Council marked a major advance in influence for the eastern states who joined the bloc this century and who share non-member Ukraine's concerns about Russian President Vladimir Putin's ambitions.
But many of the powerful western countries have hesitated to toughen trade sanctions for fear of damaging their own economies. Some of them, like Italy, are heavily reliant on Russian gas.
In her first comments, Mogherini stressed the need to work for a lasting diplomatic deal with Russia.
"As we think and we work on the level of sanctions, we also have to keep the diplomatic way open ... hoping that the combination, a wise combination, can be effective," she said.
Ex-communist states had deadlocked an earlier summit two months ago by opposing Mogherini as too soft on Russia.
The move of Tusk, a former student activist in the anti-Communist Solidarity movement, will force an upheaval in the government in Warsaw ahead of an election due next year.
In Brussels, he pledged to address British Prime Minister David Cameron's concerns over growing EU powers and immigration from eastern Europe to help avoid London quitting the Union.
Tusk will work closely with Jean-Claude Juncker, the incoming head of the EU's executive Commission. Cameron tried to block Juncker's appointment in June, fearing the former Luxembourg premier's federalist views would alienate Britons.
"WAR AGAINST EUROPE"
French President Francois Hollande stressed that a failure by Russia to reverse a flow of weapons and troops into eastern Ukraine would force the bloc to impose new economic measures.
"Are we going to let the situation worsen, until it leads to war?" Hollande said at a news conference. "Because that's the risk today. There is no time to waste."
The president of formerly Soviet Lithuania, an outspoken critic of Vladimir Putin and of EU hesitation to challenge him, called for urgent military supplies to Kiev and a tougher arms embargo on Russia. Dalia Grybauskaite said Moscow, by attacking Ukraine, was effectively "in a state of war against Europe".
Poroshenko gave short shrift to Moscow's denials by denouncing the past week's incursion of thousands of troops with hundreds of armoured vehicles and said he expected the summit to order the European Commission to prepare a new set of sanctions.
But, like Commission President Jose Manuel Barroso, he used their joint news conference to stress the importance of finding a political solution to a crisis that Putin blames on Kiev's drive to turn the ex-Soviet state away from its former master Moscow and toward an alliance with the EU and NATO.
He said he was not looking for foreign military intervention and hoped for a ceasefire deal as early as Monday, when representatives of Moscow, Kiev and the EU meet.
"I think we are very close to the point of no return," he said. "The point of no return is full-scale war, which already happened on the territory controlled by separatists."
The appointments of Tusk and Mogherini balance the interests of left- and right-wing factions across the bloc, eastern and western states, northern Europe and the south, as well as satisfying some pressure for more women in senior EU roles.
Tusk, a conservative easterner, replacing the Belgian Herman Van Rompuy; Mogherini from the centre left takes over as the bloc's foreign policy chief, replacing Briton Catherine Ashton.
Mogherini dismissed suggestions she was too young and inexperienced at 41 and pledged to speak for a "new generation" of Europeans to promote peace in the region and beyond.
Tusk will also chair summits of the euro zone countries, even though Poland has yet to adopt the common EU currency.
German Chancellor Angela Merkel said that was a mark of the leaders' determination to "show unity" and avoid the Union splitting between the 18 states using the euro and the other 10.
Other elements in striking a deal on the top jobs will be understandings reached on further key roles in the Commission, which will be formed in the coming weeks by Juncker.
Having failed to block the appointment of Juncker, whom he sees as too keen on centralising powers in Brussels, it was Cameron who last week made Tusk's candidacy public. This came at the expense of the previous frontrunner for the Council presidency, centre-left Danish premier Helle Thorning-Schmidt.
Britain, France, Germany and other countries are competing to see their nominees secure important portfolios in Juncker's team, such as in economic affairs, trade and energy supply.
The horse-trading over jobs underlines the power of rival national governments over the supranational institutions of the EU. Proponents of a strong political leadership in Brussels that can inspire and rally an increasingly sceptical European public behind the common project may again be left disappointed.
Italian Prime Minister Matteo Renzi said on Friday he would propose a meeting to discuss tackling the "really worrying" economic situation across Europe, with growth and jobs elusive and fears of a new crisis for the euro currency.
The leaders agreed to schedule that summit for Oct. 7, according to the draft statement.
Germany, the leading economic power, has given signs this week of softening its opposition to calls from Italy and France for more leeway to stimulate growth by government spending. The leaders may make statements on the issue on Saturday.
Hollande said EU states had to invest to promote growth and to use "all possible flexibilities" in the treaties that set up the currency union so that efforts to meet obligations to curb public deficits were adapted to foster economic growth. (Additional reporting by Alastair Macdonald, Julia Fioretti, Martin Santa, Andreas Rinke and Foo Yun Chee in Brussels; Writing by Alastair Macdonald; Editing by David Gregorio)
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