Vladivostok - Russian President Vladimir Putin and Japanese Prime Minister Shinzo Abe on Friday tried to make headway on a lingering territorial dispute as they sought to boost trade, but failed to make a breakthrough.
Tokyo-Moscow relations are hamstrung by a row dating back to the end of World War II when Soviet troops seized the southernmost islands in the Pacific Kuril chain, known as the Northern Territories in Japan.
The tensions have prevented the countries from signing a peace treaty formally ending wartime hostilities, hindering trade and investment ties.
Russian Foreign Minister Sergei Lavrov told reporters that the leaders had discussed the disputed islands at talks that had focused on boosting trade ties but remained vague on the prospects of solving the conflict.
"We are now sensing the readiness of our Japanese partners to discuss issues tied to joint business activities on the islands," Lavrov said, adding that the countries were also mulling humanitarian cooperation.
Abe's visit to Russia - his second this year - comes days after the Kremlin announced that Putin will travel to Japan in December, his first trip there since 2005.
Putin said in an interview with Bloomberg News ahead of the talks that Moscow was seeking a "solution where neither party will feel defeated or a loser".
"We are not talking about some kind of exchange or some kind of sale," he said.
Putin said signing a peace treaty with Japan was a "key issue" and that Moscow "would very much like to find a solution to this problem with our Japanese friends".
Over the years, leaders from the two nations have tried to make progress on resolving the row but a solution has proved elusive.
The two sides, meeting on the sidelines of an economic forum in the far eastern city of Vladivostok, had expressed the hope of easing some of the tensions surrounding the contested islands.
"I'm resolved to make progress on the peace treaty and territorial issues by holding candid and thorough talks with President Putin," Abe told reporters before he set off for Vladivostok.
Experts view recent rapprochement efforts as a positive development for Moscow's trade ties with stalwart US ally Tokyo, but doubt they will result in a resolution of their territorial dispute.
"Japan is not ready to drop its claims to the islands and Russia will by no means recognise them," Russian political analyst Konstantin Kalachev said.
Foreign minister Lavrov said earlier this year that Russia wants its ties with Japan to "move forward" but is not prepared to budge on the "result of World War II".
Russia has angered Japan recently by building new modern compounds for its troops stationed on two of the disputed islands.
Prime Minister Dmitry Medvedev infuriated Tokyo last year when he visited the islands, which are home to some 19 000 Russians.
Kremlin spokesperson Dmitry Peskov said ahead of the talks that the territorial dispute was "far from the main issue on the agenda".
Japan joined the US and EU in slapping sanctions on Russia over its meddling in Ukraine, further hindering its already modest trade with Moscow.
Bilateral trade between the countries last year fell by 31% to $21.3bn, in part due to the punishing economic measures by Japan.
Kremlin aide Yury Ushakov told reporters that in spite of the sanctions imposed by Tokyo, the Russian market remains "of great interest" to the Japanese business community.
Abe's delegation also took part in talks on a wide-range of economic issues with senior Russian officials, including Lavrov, Energy Minister Alexander Novak, and Industry and Trade Minister Denis Manturov.
Business leaders Igor Sechin, the CEO of oil giant Rosneft, and Oleg Deripaska, who heads aluminium producer Rusal, were also part of the Russian delegation.
During his visit to Russia's Black Sea city of Sochi in May, Abe proposed an eight-point economic cooperation plan with Russia that focused on energy, agriculture and industrial production.