The world's leading industrial powers urged Russia today to halt its military offensive against the rebellious region of Chechnya, but at the United States' insistence, they stopped short of threatening to use sanctions to back up their demand.

With Russian tanks and troops poised for what could be an all-out assault against Chechen rebel strongholds, the United States, its European allies and Japan called on Russia to seek a political solution to the conflict.

Secretary of State Madeleine K. Albright, speaking after a three-hour meeting here of foreign ministers from the Group of Eight, said Moscow was damaging its relations with the rest of the world by continuing to use force against the Chechen rebels.

The Group of Eight consists of seven industrialized nations--the United States, Britain, France, Germany, Italy, Canada and Japan--and Russia.

"What I think has been evident at this meeting, frankly, is that the Russians, through their actions, are self-isolating from the rest of the international community," Albright said.

But unlike some of its European allies, particularly Germany, Britain and France, the United States is not prepared to take punitive action to pressure Moscow to change its policy, Albright said.

"There's no question that continued action like this does have a serious effect even on our bilateral relationship," she said. "But we believe it is still in our national interest to maintain relations with Russia, because we have worked very hard to bring them closer to us in recent years."

Western diplomats said Russian Foreign Minister Igor Ivanov rejected pleas for an immediate halt to the fighting and insisted that Russian troops were determined to complete "anti-terrorist operations." He told the other ministers that Russia would not accept any interference in what it regards as a domestic conflict.

Before today's meeting, Germany, which is Russia's largest creditor, hinted that it would cut back economic aid or ban Russia from participating in future Group of Eight meetings until it amends its approach in Chechnya. European Union leaders last week also threatened to cut off assistance to Moscow.

But calls for a tougher response have been repeatedly rebuffed by the Clinton administration, which fears that any talk about sanctions would reinforce support for anti-Western nationalists in Russia just two days ahead of parliamentary elections there.

European diplomats expressed frustration about the weak Western response as Russian forces began advancing on Grozny from three directions. Bombs and artillery exploded across the Chechen capital as Russia launched some of its heaviest attacks on the city, where thousands of rebels are thought to be holed up and surrounded by a much larger force of well-armed Russian troops, news reports said.

Knut Vollebaek, the Norwegian foreign minister now serving as chairman of the Organization for Security and Cooperation in Europe, gave a bleak assessment of the military situation after returning from a visit to Chechnya.

"We urgently need a cease-fire; otherwise there will be a blood bath," he said. He warned that both Russian troops and Chechen rebels appear to be preparing for stepped-up fighting that could endanger as many as 45,000 civilians believed to still be in Grozny.

Following the meeting, German Foreign Minister Joschka Fischer expressed dismay over Russia's unwillingness to abandon its military offensive.

"Nobody is questioning Russia's right to combat terrorism," he said, "but present actions by the Russians are often in contradiction with international law. We see things only getting worse unless they work for a political solution as quickly as possible. They must realize they cannot fight terrorism by indiscriminately bombing a whole population."