In a chilly summit prelude, US President George W. Bush blocked Russia's entry into the World Trade Organization Saturday and Russia President Vladimir Putin mockingly said Moscow doesn't want the kind of violence-plagued democracy the United States has fostered in Iraq.

U.S. President George W. Bush and Russian President Vladimir Putin, right, hold a joint news conference at the G8 summit in St. Petersburg, Russia, Saturday, July 15, 2006.[AP]

Alternately joking and poking at each other, the two also showed differences at a news conference on the explosion of violence in the Mideast.

Bush held Israel blameless for its punishing attacks in Lebanon and Palestian and said it was up to the Hezbollah group to lay down its arms. Putin was critical of Israel's use of force and said the assault "should stop as soon as possible."

The two leaders met for two hours before the opening of the annual summit of eight major world powers, which was expected to focus on nuclear problems with Iran and North Korea and the escalating fighting in the volatile Mideast.

There was a quick handshake but little warmth between Bush and Putin during a photo opportunity opening their talks. For the second day, Bush spent part of it mountain biking.

"I talked about my desire to promote institutional change in parts of the world like Iraq where there's a free press and free religion," Bush said at the news conference, "and I told him that a lot of people in our country would hope that Russia would do the same thing."

Putin, in a barbed reply, said: "We certainly would not want to have the same kind of democracy as they have in Iraq, I will tell you quite honestly." Bush's face reddened as he tried to laugh off the remark. "Just wait," Bush said.

Putin also said Russia would not take part "in any crusades, in any holy alliances" - a remark intended to win points with Arab allies. Bush's national security adviser, Stephen Hadley, said he was perplexed by the comment.

Hosting the G-8 summit for the first time, Putin dearly wanted to win approval for Russia's admission to the WTO, the 149-nation group that sets the rules for world trade. The United States is the only country that has not signed off on Russia's membership in the WTO, and Bush dashed Putin's hopes for getting in now.

"We're tough negotiators," Bush said, adding that any agreement would have to be acceptable to the US Congress.

The Mideast violence threatened to overtake the summit's carefully planned agenda and highlight divisions among leaders. Bush has been outspoken in defending Israel and blaming Hezbollah.

"The best way to stop the violence is for Hezbollah to lay down its arms and to stop attacking. And therefore I call upon Syria to exert influence over Hezbollah," Bush said.

Putin said: "we work under the assumption that the use of force should be balanced." The European Union - and France, in particular - has condemned Israel's attacks as excessive, putting Bush at odds with key allies.

Putin said he had the impression that Israel was "pursuing wider goals" than just the return of its two soldiers. He did not elaborate.

The United States pressed for a summit statement identifying Hezbollah as the main culprit and emphasizing the importance of maintaining a democratic Lebanon. The statement also would criticize Syria, Iran, and the Palestinian group Hamas for "all acting in a way that frustrates democracy in the area and frustrates peace," said Hadley.

Russian Defense Minister Sergei Ivanov called the conflict "basically, a war that has begun" and warned that other nations in the region could be drawn into the fight.

At his late-night news conference, Putin indicated that Russia continues to oppose sanctions against Iran, saying "the question is not about toughening our stance, but about finding common approaches." He defended Iran's right to pursue nuclear technology for peaceful purposes.

"We believe that all countries in the world have the right to access high technologies, including nuclear," Putin said.