Japan and Russia have agreed to step up economic cooperation and seek resolution to a 60-year old territorial dispute.

Russian Prime Minister Mikhail Fradkov and his Japanese counterpart Shinzo Abe Wednesday in Tokyo agreed to start negotiating an agreement on cooperation in nuclear power.

The two sides also signed wide-ranging agreements on cooperation in business, energy, transportation and communications.

Fradkov, who is wrapping up a two-day visit to Tokyo, invited Japanese businessmen to invest in the Russian market.

A dispute over a string of Islands off Japan's northern coast has marred relations since World War Two. Soviet troops seized the islands in 1945. Japan wants them back. The two sides have agreed to have a more active dialog aimed at finding a solution acceptable to both.

Russia and Japan have never signed a formal peace treaty because of the territorial dispute.

Tokyo has also been concerned over Russian energy supplies. The Russian prime minister sought to reassure Japan that Russia is a reliable and stable energy provider.

Fradkov and Abe also discussed North Korea and agreed to cooperate on ensuring the shutdown of its nuclear facilities.

Some information for this report was provided by AFP, AP and Reuters.