Russian President Vladimir Putin and Japanese Prime Minister Junichiro Koizumi also agreed on Monday on a joint programme to combat terrorism and cooperate in energy, communications and tourism.

Their summit focused largely on economic ties, which the leaders said would help pave the way towards progress in the dispute over four tiny, sparsely populated islands that have prevented the nations from signing a second world war peace treaty.

"We will further deepen our economic cooperation to strengthen mutual confidence, so that in the future we can sign a peace treaty," Koizumi said at a joint news conference with Putin.

Putin said he was "fully determined to work in that direction to solve all the issues we face".

Russia, which has to strike separate deals with WTO members as a condition for joining the 148-member global trade body, has launched economic and legal reforms in order to qualify for the membership.

It has yet to negotiate a deal with the US.

"Russia's accession into this organisation will help strengthen trade ties with Japan and make them more stable," Putin said.