Obama spoke shortly after huddling with European leaders to discuss the conflict and worsening security situation.
On the potential for increasing sanctions on Russia, Obama said the US and European allies are always looking at more penalties but "at this point the sanctions we have in place are biting plenty good."
"We're also very firm on the need to uphold core international principles," Obama said at a press conference to wrap up a weeklong Asia-Pacific tour. "One of those principles is that you don't invade other countries or finance proxies and support them in ways that break up a country that has mechanisms for democratic elections."
Ukraine and the West have accused Russia of fueling the rebellion with a constant flow of troops and weapons, accusations Moscow has denied.
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Obama said his interactions with Putin during summits he's attended on his tour were typical of their interactions "businesslike and blunt." He said Russia will continue to experience international isolation if Moscow doesn't take a different path.
"It is not our preference to see Russia isolated the way it is," he said.
Putin departed Australia shortly before Obama and European leaders opened their talks. French President Francois Hollande, German Chancellor Angela Merkel and British Prime Minister David Cameron were among the European leaders attending the meeting, along with leaders from Italy and Spain and EU representatives.