Both leaders spoke in favor of deepening their economic cooperation. Medvedev praised Merkel for her crisis management skills and referred to signs that the German economy could be pulling out of the recession.

Germany is Russia's biggest trading partner in Europe, with bilateral trade between the two countries rising to a record 47.2 billion euros ($67.2 billion) in 2008.

Medvedev said he was eager to find joint solutions with Germany to the economic crisis. The crisis, he added, was a "chance to deepen their economic ties."

The two also discussed the planned Russian investments in the Wadan shipyards in Mecklenburg-Western Pomerania as well as the role of the state-owned Russian lender Sberbank and automaker GAZ in the rescue of General Motors' German subsidiary Opel.

Merkel said discussions regarding Opel's future had now reached a decisive stage. She hoped for a decision "as soon as possible."

She added that Austrian-Canadian auto parts maker Magna's bid, with its Russian partner Sberbank, is favored by her coalition government. Opel employs around 25,000 Germans.

Merkel also reaffirmed Germany's support for Russia's pipeline project in the Baltic Sea.

Chechnya killings

Though trade issues were the focus of the talks, Merkel did express her concern about the recent spate of murders in the Russian Caucasus during her two-hour meeting with Medvedev.

"We spoke about the sad news concerning the murder of representatives of non-government organizations in Chechnya," said Merkel at a news conference after the talks.

"I made clear that we obviously condemn this in the strongest terms, just like the Russian side," she added.

The bodies of children's charity chief Zarema Sadulayeva and her husband were found in Grozny on Tuesday, while in July prominent human rights activist Natalya Estemirova was found dead on a roadside hours after her abduction in Grozny.

Medvedev acknowledged Germany's concerns but reiterated that it was his and the Chechen leadership's responsibility to solve such crimes and punish the perpetrators.

"The president of the Chechen Republic [Ramzan Kadyrov] should do everything he can to find and expose those responsible," Medvedev told journalists, adding that the murders were aimed at undermining stability in the region.

On the diplomatic front, Medvedev said the two leaders had discussed difficult problems like Iran's nuclear program, North Korea and the situation in Afghanistan. Medvedev said Afghanistan was a good example of the close cooperation between Germany, Europe and the United States.

nrt/AFP/Reuters/dpa
Editor: Nancy Isenson