PARIS (AP) - Russian President Vladimir Putin and European leaders agreed Monday on the urgent need to find a political solution in the breakaway region of Chechnya, but insisted that Russian sovereignty must not be compromised.

"Europe is concerned about the situation'' in Chechnya, French President Jacques Chirac, whose country currently holds the rotating European presidency, told a news conference after the European Union-Russia summit.

France has been one of the most severe critics in Europe of Russia's war against Chechen separatists. The issue has soured Russia's relations with France and the European Union in recent months.

In a joint declaration, Russia and the EU said they "agreed on the need and the urgency of finding a political solution (to the Chechnya issue), with respect for the sovereignty and territorial integrity'' of Russia.

However, Putin told reporters Russia will not negotiate with "terrorists.''

The pronouncement was part of a joint statement at the close of a summit that lasted just several hours between Putin and European Union leaders.

Meanwhile, a group of prominent French intellectuals and lawmakers demanded that French leaders denounce Russia's war against Chechnya and withhold foreign investment from Russia.

"It is a situation of crimes against humanity, of massacres against civilians, a dirty war, a colonial war - a war that is not acceptable on the part of a country that expects to join the concert of great democratic nations,'' Noel Mamere, a lawmaker from the Greens party, said.

"What I saw was terror,'' said Andre Glucksmann, a French intellectual describing the destruction of towns and villages he saw while visiting Chechnya in June. "This has not taken place in Europe since 1944 when Hitler destroyed Warsaw.''

Russian forces moved into Chechnya in September 1999 after rebels based there attacked neighboring Dagestan, and after a series of apartment bombings in Russia that killed about 300 people and were blamed on the rebels.

For his part, Putin said Russia was taking into account Europe's concerns and said the conflict in Chechnya had to be resolved in the long-term politically.

However, speaking firmly, Putin simply denied there was any major military activity on the part of the Russian authorities.

"The war is not continuing,'' he said, calling the confrontation a "conflict'' provoked by fundamentalists and terrorists. He defended Russia's right to protect its territory against those who would try to secede. "We are doing everything to differentiate between those who honestly got confused, who fought for independence and separation from Russia, and those who are without any doubt terrorists and criminals,'' Putin said.

Besides Chechnya, Chirac said major attention had been paid to Europe's evolving policy of security and defense. Russia and the EU have decided to hold "specific consultations'' on security issues, the French leader said.

By DEBORAH SEWARD, Associated Press Writer