US President George W. Bush and Russian President Vladimir Putin met at Bush family's oceanfront compound in Kennebunkport, Maine. The two leaders hoped mend relations that have frayed in recent months over a number of issues concerning Europe, including independence for Kosovo and sanctions against Iran.

But the US' plans to station part of a missile defense shield in Europe were at the top of the agenda. While neither side backed down from their positions, Bush and Putin seemed ready to widen the dialogue within Europe and to include NATO in discussions.

"Such cooperation, I believe, would result in raising to an entirely new level the quality of cooperation between Russia and the United States," Putin said. "For all practical purposes, this would lead to a great deal of development of strategic partnership in the area of security."

"I'm in strong agreement with that concept," Bush said of the proposal to widen the dialogue.

Eastern Europe still contentious

Russia has expressed its opposition to the US proposal of setting up defensive missiles in Poland and a radar tracking station in the Czech Republic. While the US insisted the system would protect against rogue states such as Iran, Russia sees itself as a target.

At last month's Group of Eight summit in Germany, Putin had suggested an alternative: a joint US-Russia defense system located in Azerbaijan.

On Monday, Putin surprised Bush by proposing that the defense system be extended to other parts of Europe, with NATO participation.

Bush welcomed the idea as "very constructive and bold" but insisted that the Czech Republic and Poland remain "integral" to the system.

Changing tones

The meeting was seen as fostering US-Russian dialog in what the media called the presidents' "lobster summit" after Bush and Putin went fishing together, with Putin reeling in a striped bass. The two seemed more relaxed than they had at the G8 meeting last month.

"The Kennebunkport meeting seems to have succeeded in rekindling a sense of camaraderie between the two leaders," Charles Kupchan, professor of international affairs at Washington's Georgetown University told the AFP news agency. "But there doesn't seem to have been substantial progress on reaching concrete agreements on any of the major areas of dispute."

Putin's offer could be a serious alternative to the current plan, said Kupchan, who was the head of European affairs on the National Security Council under former US President Bill Clinton. But the offer could also be Putin trying to divert US attention and stall the deployment of the defense system in Eastern Europe, Kupchan added.

Bush's national security advisor Stephen Hadley said he believes Putin wants to cooperate with the US, but acknowledged discussions remain in the preliminary stages.

"What you saw was a very interesting shift and some real progress on this issue," Hadley said.

Iranian question

How to handle Iran's nuclear ambitions has also been a contentious issue between the US and Russia.

"When Russia and America speak along the same lines, it tends to have an effect," Bush said, adding that he and Putin had agreed to send a common message.

But finding common ground could prove difficult as the US and its European allies accuse Iran of using its nuclear program as a cover to build atomic weapons and are pushing for tougher UN sanctions against Tehran.

Moscow, however, has maintained that Iran has cooperated with UN nuclear inspectors and sees progress in bringing Iran into further compliance.

"So far, we have managed to work within the framework of the Security Council, and I think we will continue to be successful in this track," Putin said.

The future of the Serbian province of Kosovo was also a contentious issue with Russia and the US having different views on the country's future. Possible independence for Kosovo was not mentioned in a press conference held at the end of the presidents' meeting.