BERLIN (Reuters) -Chancellor Olaf Scholz warned Russia of "serious" economic and political consequences should it ramp up military aggression toward Ukraine, while adding that Germany and its allies were ready for dialogue with Moscow and wanted peace.

       With Russia holding military exercises in Belarus and the Black Sea following its troop buildup near Ukraine, the stand-off has raised fears of a war in Europe, sending energy costs soaring across the continent, which relies on Russian gas supplies.

       "What is at stake at the moment is nothing less than preventing a war in Europe. We want peace," Scholz told reporters at a meeting with Baltic state leaders in Berlin on Thursday, calling for Russia to de-escalate.

       "Further military aggression by Russia against Ukraine would have very serious political, economic and strategic consequences for Russia," he said. "At the same time, we are ready for serious talks with Russia, for a dialogue on European security issues."

       The Kremlin denies accusations by the United States and its allies that it was planning to invade its neighbour.

       Scholz met Estonian Prime Minister Kaja Kallas, Lithuanian President Gitanas Nauseda and Latvian Prime Minister Krisjanis Karins, who want Germany to play a bigger role in efforts by the NATO military alliance to boost defences against Russia in Eastern Europe.

       "Our focus is on supporting Ukraine," said Kallas. "De-escalation cannot come at gunpoint and at the expense of Ukraine."

       Latvian Prime Minister Karins urged Germany to take "a leading role to lead the European Union and NATO through these difficult times."

       Scholz is under pressure from the United States to halt a completed pipeline to bring Russian gas to Germany in case of a Russian military incursion into Ukraine.

       Scholz has not mentioned the Nord Stream 2 pipeline project in the context of consequences he said Russia would face. He had previously said that all options were on the table.

       (Reporting by Paul Carrel, Sarah Marsh and Thomas Escritt in Berlin and Andrius Sytas in Vilnuis; Writing by Joseph NasrEditing by Tomasz Janowski)