German Chancellor Angela Merkel and Russian President Vladimir Putin met in the eastern German city of Dresden on Tuesday for annual bilateral deliberations aimed at fostering Russian-German ties.

The German chancellor used the opportunity to express her shock and dismay at the contract-style killing of Anna Politkovskaya on Saturday, a Russian investigative journalist and prominent Putin critic.

Following his meeting with Merkel, Putin told the German press that everything would be done to track down the killers.

"I'd like to stress that we consider this murder as an abominable crime," Putin said. "She was without a doubt a journalist who was highly critical of the government, but her killing has damaged Russia's reputation much more than her articles. All I can say is that we will do everything to bring the perpetrators to justice."

Thousands of mourners -- including foreign diplomats and journalists -- attended Politikovskaya's funeral in Moscow on Tuesday.

Energy matters

An undertone of German concern was also perceptible at the talks over the country's dependency on Russian supplies of oil and gas. Memories of disruptions of Russian gas supplies to Europe still rankled with the German chancellor.

Merkel, however, said she trusted Russia as a reliable business partner.

"It is important for me to have realized that we are acting on the same business principles as the Russian government in this cooperation," Merkel said.

"We are currently working out a joint charter in which these principles will be enshrined. As a matter of fact, I'm not reluctant either to accept Russia's increasing importance in the business world which is being reflected in the fact that Russian companies are buying themselves into European firms."

Russia to double gas exports to Germany

Putin said Russia planned to use a gas pipeline currently being built under the Baltic Sea between Russia and Germany to ship an additional 50 to 55 million cubic meters of gas to Germany annually.

Russia presently supplies Germany with 40 million cubic meters of gas a year -- about a third of German needs. The 1,200-kilometer (745-mile) Baltic gas pipeline is due to start operating in 2010.

"This would mean that Germany is not only a consumer of natural gas but would make it a big European distributor of Russian gas," Putin said. "This will transform the energy face of Germany and strengthen its role in European energy matters."

Putin's words are likely to further anger the Polish government which has strongly opposed the Baltic Sea gas pipeline. Ties between Germany and Poland have been frosty over the past year due to this and a number of issues relating to World War II.

The North Korean threat

The series of routine meetings of German and Russian leaders is known as the "Petersburg Dialogues," named after the Russian city where the first meeting was held in 2001.

Both leaders denounced the explosion of a nuclear device by North Korea as an irresponsible act.

They called on the international community to keep a wary eye on developments there. The Russian president, however, did not comment on whether his government would support sanctions again North Korea.

Diverse areas of cooperation

On the sidelines of their meeting the two leaders oversaw the signing of a raft of deals aimed at strengthening the economic, scientific and cultural cooperation between the two countries.

Russia's oil wealth has made companies from the country potent investors also in the German economy.

Somewhat unusual evidence of that was a 100 million euro ($126.6 million) soccer sponsorship deal between the German Bundesliga club Schalke 04 and Russian oil giant Gazprom that was also signed on Tuesday.

A new German-Russian joint venture

In another agreement signed on Tuesday, the European Aeronautics Defense and Space Company (EADS) with its aircraft arm Airbus and its Dresden freighter conversion subsidiary Elbe Flugzeugwerke (EFW) agreed with Russian aircraft manufacturer Irkut to form a joint venture to convert Airbus A320 passenger planes into freighters.

Under the terms of the agreement, Airbus, EFW and Irkut will perform the conversion of single-aisle passenger aircraft into cargo aircraft and market and sell conversion services. EADS and Irkut will set up an equal joint venture to this end, with production scheduled to start in 2010.

EADS said in a statement that, in the initial phase, some 30 A320 and A321 aircraft would be converted per year, with both Russian and international freight operators seen as potential customers.