Japanese Prime Minister Yasuo Fukuda focused on a new global climate change initiative and a decades-old dispute over a group of Pacific islands when he met Russia's two leaders yesterday.

Japanese officials had said Fukuda would urge Russia to accelerate talks aimed at resolving the territorial row over the islands, a running sore in relations that has prevented the two states from signing a peace treaty ending World War II.

"We are continuing dialogue on the peace treaty and will create the necessary conditions for advancement along this path," President Vladimir Putin said at the opening of talks at the Novo-Ogaryovo presidential residence outside Moscow.

Putin said "there still exist many unresolved problems" in relations and Russian officials played down any chance of a deal on the islands, known in Russia as the Southern Kuriles and in Japan as the Northern Territories.

"I would like to elevate relations between the two countries to a higher dimension that will contribute to peace and stability in the Asia-Pacific region," Fukuda told Putin.

Fukuda also held talks with president-elect Dmitry Medvedev that focused on the agenda for the Group of Eight summit which Japan hosts this year.

Japan has placed finding a more effective replacement for the Kyoto Protocol on climate change, which expires in 2012, at the top of the summit agenda.

Tokyo hopes the G8 summit will help draft a climate change agreement that would embrace the biggest polluters such as the United States, China and India. None of these has signed up to the Kyoto Protocol's limits on emissions.

"I am glad to have a meeting with you and have the chance to be acquainted," said Medvedev, who will be sworn in as president on May 7. Medvedev said he wanted to discuss "above all the G8 summit" on Japan's northern island of Hokkaido.

Fukuda would urge the Russian leaders to accelerate talks aimed at resolving the territorial row, a senior Japanese government official said.

"Prime Minister Fukuda is expected to tell them that it is indispensable for the two countries to advance negotiations in a concrete fashion in order to elevate bilateral ties to a higher dimension," the official said.

Russia has said it is ready to talk about the dispute, but is not prepared to give up the islands. "There is no change in our position. We do not expect any breakthroughs (in the talks with Fukuda)," a Kremlin official said before the meetings.

Trade between Russia and Japan was worth $20 billion in 2007, fuelled by automakers such as Toyota Motor Corp which has set up a factory to tap into the booming Russian market.

But bilateral trade with Japan is less than half Russia's trade with China.

Japanese companies want to invest more in energy projects in Russia, the world's second biggest oil exporter, to reduce dependence on oil from the Middle East. But Russian officials said there were no major deals planned.

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