European Union (EU) and Russian leaders downplayed their differences Friday and vowed to strengthen their energy cooperation which both sides feel is crucial to their economies.

Speaking after having informal talks with Russian President Vladimir Putin during a dinner in the southern Finnish town of Lahti, EU leaders stressed the importance of Russia in the EU's external relations and expressed a strong desire to deepen energy ties with the giant neighbor.

Russian President Vladimir Putin holds a joint news conference with Finnish Prime Minister Matti Vanhanen and European Commission President Jose Manuel Barroso after a European Union leaders summit in Lahti October 20, 2006. European leaders vowed to press Putin on mounting concerns over human rights and Georgia at tense talks on Friday while seeking to court him for closer energy ties.[Reuters]

The 25-nation bloc is keen to develop "a close and legally-binding partnership" with Russia which is long-term and mutually balanced, Finnish Prime Minister Vanhanen said.

But the EU also made clear that Russia needs to change its behavior in certain areas to help build up mutual trust, which is essential to the further enhancing of relations.

Transparency, rule of law, reciprocity, as well as non-discrimination and market opening, are among the issues that EU leaders raised with Putin.

Putin, for his part, stressed that Russia is just as dependent on the EU as the EU is dependent on Russia. He said Russia is committed to a stronger relationship with the EU.

"We are very determined to build up a solid relationship ... rooted in common values and common interest," he said.

Putin told EU leaders that Russia will continue to work on an energy charter that has been eagerly sought by Brussels, Czech President Vaclav Klaus said.

Russia is prepared to present at the EU-Russia summit in a few weeks a well-elaborated version of the charter, he told reporters.

Ratification of the charter, which Russia signed in 1994, would end the monopoly of Russia's powerful state-run Gazprom energy company and Moscow has been reluctant to do that.

During the dinner, Putin assured EU leaders that Russia now canb better guarantee its energy supplies to EU member states.

He said Russia and Ukraine had signed a contract that strictly separates the supplies that are destined for Ukraine and those that only cross Ukrainian territory.

The Russia-Ukraine price war early this year has sent shock waves through the EU when Moscow's severance of gas supplies to its neighbor caused disruptions in gas supplies to some eastern EU states.

Dismissing European fears that Russia is imposing restrictions on foreign participation in Russian energy projects, Putin said Russia has not restricted, and will not restrict foreign companies' access to its energy market.

He said foreign investment in Russia has been growing rapidly, and Russia will always welcome foreign capitals.

During their "open" and "frank" discussions, the EU urged Moscow to bring to justice the killer of Russian journalist Anna Politkovskaya and to take steps to calm tensions with Georgia.

But Putin stressed the issue of South Ossetia and Abkhazia, where he says there is a risk of a big bloodshed. Putin asked the EU for help in averting such bloodshed.

EU leaders said that such free exchange of opinions, though maybe hard, is useful and will contribute to development of relations with Russia.

EU leaders and Putin also discussed international issues Friday. They agreed to enhance cooperation further on Iran, the nuclear issue in the Korean Peninsula, and the Middle East.