President Poroshenko: "EU deal marks historic day for Ukraine"
Ukraine's president has hailed a "historic" trade pact with the European Union, calling it the "most important day" since independence in 1991.
But Russia said the partnership agreement, also signed by two other ex-Soviet states Georgia and Moldova, would have "serious consequences".
The pact has been at the heart of Ukraine's current crisis.
Russian President Vladimir Putin said making Ukraine choose between Russia and the EU would split it in two.
A ceasefire between Ukrainian forces and pro-Russian separatists in restive eastern Ukraine is set to expire on Friday.
Ukrainian President Petro Poroshenko, in Brussels to sign the pact, said he would take a decision on whether to extend to the week-long truce when he arrived back in Kiev later on Friday.
There is a general sense of irritation or perhaps even anger here that Moscow has failed to convince countries like Ukraine, Moldova and Georgia not to sign this historic free trade deal today with the EU.
Moscow has economic concerns about these deals - it is worried that the Russian market could be flooded by cheap goods from the EU that would hit Russian producers.
More pressing for Moscow are the geopolitical concerns here - the whole idea of former Soviet states, countries that Moscow still views as being within its sphere of influence, drifting towards Europe and one day possibly becoming part of the EU - that really grates with Moscow, particularly in the case of Ukraine.
There's a lot of concern about what could happen in eastern Ukraine - the ceasefire announced a few days ago by Mr Poroshenko, and the ceasefire announced by armed separatist rebels, is due to expire today. It's unclear how things are going to develop later.
Russian Foreign Minister Sergei Lavrov said he would welcome an extension, but not if it were simply an ultimatum for separatists to lay down their arms.
Mr Putin insisted on a long-term ceasefire to allow for negotiations between the Ukrainian government and separatists, urging Mr Poroshenko to embark on a "path of peace, dialogue and accord".
Mr Putin said: "There is bloodshed in the south-east Ukraine, humanitarian catastrophe, tens of thousands of refugees have to look for shelter, on Russian territory."
Mr Poroshenko (right, with Jose Manuel Barroso) hailed the signing as "historic"
Pro-Russian militants in Donetsk. A ceasefire expires on Friday
Mr Putin said that "attempts to force on the Ukrainian people an artificial choice between Europe and Russia brought [a split] to society, a painful internal confrontation".
The refusal of Mr Poroshenko's predecessor, Viktor Yanukovych, to sign the EU deal, under pressure from Russia, had led to protests in Kiev and his eventual overthrow this year.
In Brussels, Mr Poroshenko hailed the 1,200-page Association Agreement as a turning point, describing it as a "symbol of faith and unbreakable will".
"What a great day! It is a historic day, the most important day since independence," he said.
Mr Poroshenko also said he saw the signing as the start of preparations for joining the EU bloc.
The pact binds the three countries more closely to the West both economically and politically.
European Council President Herman Van Rompuy described the pacts as a "great day for Europe".
But Russian Deputy Foreign Minister Grigory Karasin said there would "undoubtedly be serious consequences for Ukraine's and Moldova's signing".
The Kremlin immediately said it would take "all the necessary measures" against Ukraine.
Russia has warned it will hit Ukraine with punishing trade restrictions.
It could withdraw Ukraine's duty-free benefits as a member of the Commonwealth of Independent States.
The European Council on Friday also issued a policy statement on Ukraine, setting out key steps it expected to happen by Monday, including the return of three key checkpoints to Ukrainian forces and the "launch of substantial negotiations on the implementation of President Poroshenko's peace plan".
Mr Poroshenko set out a 15-point peace plan on 20 June. It involves decentralising power and holding early local and parliamentary elections.
It also proposes the creation of a 10km (six-mile) buffer zone on the Ukrainian-Russian border, and a safe corridor for pro-Russian separatists to leave the conflict areas.
The European Council did not announce any new sanctions against Russia but said that it continued to assess the situation.
One EU diplomat told Reuters the bloc could expand its sanctions against Russia as early as next week if there were no de-escalation of tension.
Some worry about losing Russia as a market for Georgian wine again, as Rayhan Demytrie reports
Meanwhile the United Nations refugee agency said there had been a sharp rise in the numbers of displaced people in eastern Ukraine in the past week, with 16,400 people fleeing the area.
The total number internally displaced has reached 54,400, while a further 110,000 people left Ukraine for Russia this year.
Fighting is said to have continued in some areas of eastern Ukraine despite the ceasefire.
Indirect negotiations were taking place on Friday with separatist leaders for an extension of the truce,
In another development, rebels released four international observers captured more than a month ago.
Alexander Borodai, head of the self-styled Donetsk People's Republic, said the members of the Vienna-based Organisation for the Security and Co-operation in Europe (OSCE) had been freed as a goodwill gesture.
More than 420 people have been killed in fighting between pro-Russia rebels and government forces in eastern Ukraine since mid-April, the UN estimates.
The separatists have declared independence, claiming that extremists have taken power in Kiev.
Their move followed Russia's annexation of Ukraine's Crimea region.
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