Nagato - Japanese Prime Minister Shinzo Abe said he and Russian President Vladimir Putin spent much of their first round of talks at a hot springs resort in western Japan on Thursday discussing a territorial dispute that has divided their countries for 70 years.For Putin, the summit meeting in Nagato city marks his first official visit to a G-7 country since Russia annexed Crimea in 2014.Abe invited Putin even though the G-7 nations, including Japan, still have sanctions on Russia. The talks will move to Tokyo on Friday.Abe said the two leaders talked for three hours, spending about half of the time on the dispute over four islands seized by the former Soviet Union in the closing days of World War II, and a peace treaty officially ending the two countries' wartime hostilities. A major breakthrough is seen as unlikely.The disagreement over the four southern Kuril islands, which Japan calls the Northern Territories, has kept the two countries from signing a peace agreement."We had in-depth discussions on a peace treaty," Abe told reporters.He said the two leaders also discussed possible joint economic projects on the disputed islands. Abe hopes such economic cooperation will bolster ties and help solve the territorial dispute if they are operated under a special legal status that does not raise sovereignty issues. Russia, however, wants them to be run under its law.Putin expressed concern about the deployment of US missile defence systems in Japan, calling them an overreaction to North Korea's missile program, Japanese media reported. Abe assured him that they are limited to self-defence and do not pose a threat to neighbouring countries, while stressing the importance of discussing defence issues amid growing security concerns in the region, they said.To that end, the two leaders agreed to resume "2+2" talks among the countries' foreign and defence ministers, Russian Foreign Minister Sergey Lavrov said. Lavrov, who is accompanying Putin, attended the first and last "2+2" meeting three years ago.Abe did not say if there was any progress on the territorial issue. The two leaders will release a joint statement after the end of the talks Friday, he said.In brief remarks before the meeting, Abe told Putin that the hot spring waters of Nagato are famous for relieving fatigue.Meeting started late"I can guarantee you that the hot springs here would fully remove fatigue from our summit talks," he said.Putin replied, "Better not to get too tired." He also credited Abe's efforts for "a certain movement in the development of Russian-Japanese ties."James Brown, a Japan-Russia expert at Temple University's Japan campus in Tokyo, said the meeting was "an extraordinary development. I think Prime Minister Abe is being really quite bold in announcing this new approach to relations with Russia, especially coming at such a difficult time in relations between Russia and the West."The meeting started after 18:00, more than two hours behind schedule, because Putin's plane landed late. Putin has a reputation for late arrivals. He kept Pope Francis waiting at the Vatican for one hour and 20 minutes in 2015. Earlier this month, Japanese Foreign Minister Fumio Kishida waited for two hours when he visited the Kremlin.Thursday's delay was because of "scheduling issues" including ones related to Syria, Putin spokesperson Dmitry Peskov told reporters, without elaborating.Abe, who flew from Tokyo to Nagato in the morning, used the time to visit the grave of his father, Shintaro Abe. As foreign minister, the elder Abe strove for a resolution of the territorial dispute in the 1980s.Japan says the Soviet Union took the islands illegally, expelling 17 000 Japanese to nearby Hokkaido, the northernmost of Japan's four main islands. Russia governs the islands and the Russians who now live there.Putin told Japanese journalists earlier this week that progress hinges on Japan's flexibility to compromise, and that he doesn't mind the status quo. "We think that we have no territorial problems. It's Japan that thinks that is has a territorial problem with Russia," he said.But Russia wants to attract Japanese investment, particularly to its far east. Japan hopes that stronger ties through joint economic projects will help resolve the thorny territorial issue over time.